Speaking to the Financial Times, the chancellor said Britain needs to “make the most of the hand we’ve been dealt”, and claimed he wanted a leading role in forging the UK’s future economy.
Advertisement
“The negative impact of the Brexit on United Kingdom competitiveness may push the United Kingdom to be even more aggressive in its tax offer”, said Pascal Saint-Amans, the OECD’s head of tax in an internal memo that was brought to light by Reuters.
The rate is now 20 percent, and had been scheduled to fall to 18 percent by 2020.
Responding to the interview, Jonathan Isaby, chief executive of the low tax campaign group the TaxPayers’ Alliance, said the rate cut would show “the United Kingdom is ready to seize new opportunities in the global economy”.
The signs from Mr Osborne of a softer approach to fixing the public finances and tax cuts to woo investors come after Bank of England Governor Mark Carney said that he believed the economy would need more monetary stimulus soon.
Such a cut in corporation tax would put Britain rates closer to those of the Republic of Ireland (12.5 per cent), and much lower than the United States (39 per cent) and Germany (30 per cent).
A drastic drop in corporate tax as envisaged by George Osborne could easily anger some European Union countries, which have expressed concerns about competitive tax policies.
Other elements of Osborne’s plan to steer the economy through the upheaval caused by the Brexit vote included ensuring support for bank lending, intensifying efforts to direct investment to northern England and maintaining Britain’s fiscal credibility, the FT quoted him as saying.
In his March Budget, the Chancellor pledged to reach a budget surplus of £10bn by 2020 – despite critics arguing success was unlikely. It could also alienate voters who opposed the deals handed to companies such as Google.
The financial markets initially tumbled but have since recovered. But you can’t assume that: we’ve got to negotiate that with our former European Union partners.
The chancellor did not backtrack on his warning that a Brexit vote would cause a recession.
Advertisement
“Going to 15 percent does not seem to me to be a good initiative”, the EU’s economic affairs commissioner, Pierre Moscovici, told French radio station Radio Classique.
