A flood of firms could quit UK, says CBI boss

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The "trickle" of companies leaving the UK because of the rising business tax burden could become a "flood", the leader of the UK's biggest business lobby group warned yesterday.

Richard Lambert, the director general of the CBI, said the UK was raising business taxes at a time when its European rivals were cutting theirs.

He highlighted the Republic of Ireland where a corporation tax rate of 12.5 per cent had helped attract multinationals to site their HQ in Dublin. The Republic has attracted hi-tech companies including Google, Yahoo! and Amazon to set up their European base there.

In a briefing to mark his first 100 days as the figurehead of British business, Mr Lambert said: "Relative to our European partners, the burden of tax is rising and getting more complex. "Some companies are relocating and one sees a trickle and our anxiety is that will turn into a flood for lots of obvious reasons."

He said pressure was growing on all political parties to offer tax cuts to business. "Either companies will generate more revenue outside the UK or corporation tax has to come down," he said. "The reality is there, the pressure is growing and this will be one of our most forceful themes going forward."

The Treasury said the UK had one of the world's most competitive business climates, pointing to surveys showing it led Europe in terms of inward investment. "This Government has reduced corporation tax to its lowest-ever rate and introduced the lower rate of tax for small companies," a spokesman said. "The UK is one of the most stable economies in the world with low burdens on business, making the UK an attractive location for businesses."