Is the UK really open for business?
One of the selling points for Brexit was that the UK, freed of EU regulations and tax requirements, could flourish as an economic powerhouse. Even if the notion of Singapore-onthames was always fanciful, the prospect remained of a highly competitive rival to the European bloc.
So far, little has been done to realise this ambition. The Government says it is now embarking on a regulatory reform package intended to remove red tape and other bureaucratic blockages to growth and inward investment, but big hurdles remain.
A report today from the Centre for Policy Studies (CPS) says that far from making the most of new freedoms, Britain is actually becoming a less attractive place to do business. The think tank claims to have carried out the largest ever survey of UK investors, based on interviews with more than 100 commercial leaders controlling hundreds of billions of pounds in capital.
They warned that the Government has yet to put forward the policies, or produce a narrative, that makes an irresistible case for Britain as a place to do business. While interviewees thought the UK is still preferable to many European counterparts, we are losing ground. The CPS said there was a widespread belief that in recent years “the direction of travel has been negative”.
The UK had been gradually reducing corporation tax rates and had intended to charge 17 per cent on large company profits this year. But that cut was postponed and the rate kept at 19 per cent. From next year it is due to rise to 25 per cent for companies with profits over £250,000.
True, there are lower charges for smaller firms and other deductions, extensions and exemptions, but part of the problem is the complexity of the corporation tax regime, which is as much a barrier as the rates themselves.
The system needs to be competitive and simple to understand, with specific tax breaks to boost investment. One thing that investors will not wish to see is a windfall tax on energy giants, however it is dressed up to bridge the gap between No10 and the Chancellor Rishi Sunak.
This is not an ideological point but a pragmatic one. If the UK wants to prosper and its citizens are to weather the coming economic downturn then the Government’s entire strategy must be directed towards boosting investment and growth. There is no sign yet that it is.