UK Edition
UK ‘can’t afford tax cuts to attract more firms after Brexit’
Britain will struggle to afford to become a tax haven if the Government chooses to slash corporate taxes further after Brexit, economists believe.
The Chancellor of the Exchequer, Philip Hammond, floated the idea that taxes could be chopped to bring more business to the UK if negotiations with the European Union turned sour.
But analysts think such a move would be prohibitively expensive at a time when the UK government is still running a large budget deficit.
“These threats lack credibility, given the likely lingering weakness of the public finances by the time of the UK’s departure from the EU,” said Samuel Tombs at Pantheon Macroeconomics.
Corporation tax cuts to date have already reduced the Government’s tax haul by around £11bn a year.
Martin Beck at Oxford Economics said: “If you look at countries like Ireland or Singapore, they didn’t have anything to lose when embarked on that policy. But for the UK when you’re raising almost £50bn per year from corporation tax, it is much more costly.”