Osborne: Cut corporation tax rate to 15%

George Osborne last night announced plans to cut corporation tax to 15 per cent to help Britain survive economic shocks after the Brexit vote.

the chancellor said he would accept the referendum verdict as he said tax cuts could be needed to woo businesses deterred from investing in the UK after the vote to leave.

He said that despite the remain side’s defeat, he wanted a leading role in shaping Britain’s new economic destiny, laying out plans to build a ‘ super competitive economy’.

‘We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt,’ he added. Mr Osborne wants Britain to set the lowest corporation tax rate of any major economy, announcing a target of less than 15 per cent, down from 20 per cent now.

He said Britain should ‘get on with it’ to prove to investors that the country was still ‘open for business’.

‘What’s done is done,’ the chancellor added. ‘the British public has spoken. We should accept their verdict instead of moping around or trying to unpick it.

‘We have now got to be part of a supreme national effort to make it work for the British people. i’m going to do my best over the next coming months, then it’s up to the next tory leader whoever he or she may be.’

Beside the tax cut, the chancellor said his five-point plan included focusing on a new push for investment from china, ensuring support for bank lending, redoubling efforts to invest in the northern powerhouse, and maintaining the UK’s fiscal credibility. Mr Osborne said he was ‘not backing anyone at the moment’ in the conservative leadership contest, although his friends say he would like to continue at the treasury or move to the Foreign Office if offered the chance. Some of his allies have already thrown their weight behind theresa May.

the large cut in business taxes would take Britain close to the 12.5 corporation tax rate in ireland, and would anger EU finance ministers, who fear a race to the bottom. the head of tax at the Organisa- tion for economic co- operation and Development has warned that Brexit ‘may push the UK to be even more aggressive in its tax offer’, but that further steps in that direction ‘would really turn the UK into a tax haven type of economy’.

Mr Osborne told the Financial times that Britain faced a ‘very challenging time’ and urged the Bank of england to use its powers to avoid ‘a contraction of credit in the economy’, reminiscent of the squeeze during the height of the financial crisis in 2008.

the chancellor said he hoped a post-Brexit deal would include some access to the EU single market: ‘the priority is getting our new relationship with europe in place and right and that means putting the greatest emphasis on having the best possible trade in goods and in services including financial services.’

He added the UK would aggressively seek new bilateral trade deals, and that he would lead an extended visit to china this year in an attempt to keep inward investment flowing.

in spite of the expected shock to the public finances, the chancellor called for the next prime minister to continue investing in the HS2 rail project from london to the north and trans-Pennine rail improvements, and to approve a new airport runway for the South east.