Chancellor Philip Hammond has apparently rejected the plan of his predecessor George Osborne to slash corporation tax to just 15 per cent in the wake of the UK’s Brexit vote.
In early July Mr Osborne said he wanted to push the levy on company profits to 15 per cent as a bold signal to global companies that the UK is still “open for business” despite the vote to leave the EU.
That would have taken the UK’s rate close to Ireland’s ultra-low 12.5 per cent.
However, in his speech to the Conservative Party conference in Birmingham today, Mr Hammond made no reference to that 15 per cent goal, merely referencing the existing policy for the levy to decline to 17 per cent.
“At 20 per cent, we have a highly competitive Corporation Tax rate,” he said.
“And as it falls to 17 per cent over the next three years, it will be more attractive still.”
Mr Osborne had slashed the rate from 28 per cent in 2010 and had made deep reductions in the levy one of the centrepieces of his personal economic record.
But as The Independent has reported, his proposals to carry on reducing the rate were drawing growing criticism from prominent economists.
Some EU leaders had also warned that slashing the corporation rate was harmful to tax competition and would hinder the UK’s efforts to negotiate an advantageous post-Brexit trade deal.
In contrast to the International Trade Secretary Liam Fox, who recently described UK businesses as “fat and lazy” for failing to export enough, Mr Hammond stressed that he fully grasped the anxiety of businesses about Brexit.
“They have understandable questions about the process of the negotiations ... I understand their concerns: business hates uncertainty,” he said.
What experts have said about Brexit
What experts have said about Brexit
1/11 Chancellor of the Exchequer Philip Hammond
The Chancellor claims London can still be a world financial hub despite Brexit “One of Britain’s great strengths is the ability to offer and aggregate all of the services the global financial services industry needs” “This has not changed as a result of the EU referendum and I will do everything I can to ensure the City of London retains its position as the world’s leading international financial centre.”
2/11 Yanis Varoufakis
Greece's former finance minister compared the UK relations with the EU bloc with a well-known song by the Eagles: “You can check out any time you like, as the Hotel California song says, but you can't really leave. The proof is Theresa May has not even dared to trigger Article 50. It's like Harrison Ford going into Indiana Jones' castle and the path behind him fragmenting. You can get in, but getting out is not at all clear”
3/11 Michael O’Leary
Ryanair boss says UK will be ‘screwed’ by EU in Brexit trade deals: “I have no faith in the politicians in London going on about how ‘the world will want to trade with us’. The world will want to screw you – that's what happens in trade talks,” he said. “They have no interest in giving the UK a deal on trade”
4/11 Tim Martin
JD Wetherspoon's chairman has said claims that the UK would see serious economic consequences from a Brexit vote were "lurid" and wrong: “We were told it would be Armageddon from the OECD, from the IMF, David Cameron, the chancellor and President Obama who were predicting locusts in the fields and tidal waves in the North Sea"
5/11 Mark Carney
Governor of Bank of England is 'serene' about Bank of England's Brexit stance: “I am absolutely serene about the … judgments made both by the MPC and the FPC”
6/11 Christine Lagarde
IMF chief urges quick Brexit to reduce economic uncertainty: “We want to see clarity sooner rather than later because we think that a lack of clarity feeds uncertainty, which itself undermines investment appetites and decision making”
7/11 Inga Beale
Lloyd’s chief executive says Brexit is a major issue: "Clearly the UK's referendum on its EU membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe”
8/11 Colm Kelleher
President of US bank Morgan Stanley says City of London ‘will suffer’ as result of the EU referendum: “I do believe, and I said prior to the referendum, that the City of London will suffer as result of Brexit. The issue is how much”
9/11 Richard Branson
Virgin founder believes we've lost a THIRD of our value because of Brexit and cancelled a deal worth 3,000 jobs: We're not any worse than anybody else, but I suspect we've lost a third of our value which is dreadful for people in the workplace.' He continued: "We were about to do a very big deal, we cancelled that deal, that would have involved 3,000 jobs, and that’s happening all over the country"
10/11 Barack Obama
US President believes Britain was wrong to vote to leave the EU: "It is absolutely true that I believed pre-Brexit vote and continue to believe post-Brexit vote that the world benefited enormously from the United Kingdom's participation in the EU. We are fully supportive of a process that is as little disruptive as possible so that people around the world can continue to benefit from economic growth"
11/11 Kristin Forbes
American economist and an external member of the Monetary Policy Committee of the Bank of England argues that the economy had been “less stormy than many expected” following the shock referendum result: “For now…the economy is experiencing some chop, but no tsunami. The adverse winds could quickly pick up – and merit a stronger policy response. But recently they have shifted to a more favourable direction”
Adam Marshall of the British Chambers of Commerce said that Mr Hammond had made an “important start” in terms of building business confidence in his speech and singled out the new guarantee of any EU funding won by UK companies between now and the Brexit date.
But Mr Marshall added that the Chancellor needed to follow up by giving the green light to major infrastructure projects in the Autumn Statement on 23 November.
In her response to the speech, Carolyn Fairbairn, director-general of the Confederation of British Industry, said the “core challenge” of determining the UK’s trade relationship with the rest of the EU still loomed and stressed that “the clock [is] now ticking”.
Mr Hammond offered no specifics on what sort of relations with the EU the Government would be seeking, saying only that ministers would “fight for the best possible deal for British business and British workers”.Reuse content