Brexit: Ministers consider secret plan to slash taxes to rescue economy in event of no-deal

Cuts to VAT and corporation tax said to be part of 'Project After' proposals

The government has drawn up secret plans that include the option of slashing taxes and tariffs to rescue the economy if there is a no-deal Brexit, reports suggest.

The plan, being overseen by cabinet secretary Sir Mark Sedwill, have been compiled as a list of possible options for ministers to help offset the economic impact of leaving the EU without a deal.

The proposals, named “Project After”, have been called a “Doomsday list of economic levers”.

They were compiled with input from across Whitehall, including the Treasury, the Department for International Trade and the Cabinet Office. The Bank of England is also reported to have been involved.

One Whitehall source told the Financial Times: “It’s basically a Doomsday list of economic levers we could pull if the economy is about to tank. Sedwill has been working on it since the summer.”

The plan reportedly includes the option of cuts to corporation tax and VAT, along with increases in public spending.

Moves to cut taxes and boost spending could prompt fears of rising interest rates and inflation, however.

It emerged earlier this week that ministers are considering cutting all tariffs to zero if Britain leaves the EU without a deal.

Downing Street confirmed that the option was being actively discussed, with Theresa May’s spokesman saying: “We are currently considering all options for how to balance our interests effectively in the event of no-deal before making a final decision in the interests of UK industry and consumers.”

The Bank of England warned yesterday that the “fog” of Brexit means the UK economy is now forecast to grow by just 1.2 per cent this year – the least since the 2009 recession and lower than the last forecast in November, which predicted 1.7 per cent growth.

The Bank’s governor, Sir Mark Carney, said: “That fog of Brexit is causing short-term volatility in the economic data and, more fundamentally, it’s creating a series of tensions.

“Although many companies are stepping up their contingency planning, the economy as a whole is still not prepared for no-deal, no-transition exit.”