Chancellor George Osborne is to cut corporation tax from 20 per cent to less than 15 per cent in an attempt to win back investors’ business confidence following the Brexit vote.
Osborne says Britain must show the world it is “still open for business” and outlined a new five-point plan to build a “super competitive economy” with low business taxes and a global focus, the chancellor told the Financial Times.
He says: “We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt.”
The sharp cut in the levy will bring the UK close to the 12.5 per cent corporation tax rate currently applied in Ireland.
Other plans include a new push for investment from China, ensuring support for bank lending, focusing on investments in the Northern powerhouse and maintaining the UK’s fiscal credibility.
Last week, the chancellor abandoned his target of turning the UK’s budget deficit into a surplus by 2020 because of the expected “negative economic shock” for the UK after the referendum result.
Osborne says the UK is facing a “very challenging time” and urged the Bank of England to do whatever it can to avoid “a contraction of credit in the economy”.
The BoE will publish the results of its Financial Policy Committee meeting on Tuesday.