Report says if EU Blocks Trade Deal in Brexit, UK could Slash Corporation Tax to 10 Percent

If the European Union refuses to agree a post-Brexit free trade deal or blocks U.K.-based financial services firms from accessing its market, the Sunday Times said citing an unidentified source that Britain could slash its headline corporation tax rate to 10 percent from 20 percent.

Amid growing fears other EU member states will take a hard line in Brexit negotiations, the idea had been put forward by Prime Minister Theresa May’s advisers, the newspaper said.

The newspaper said that to grant “passporting” rights for financial services firms to continue operating across the EU, the proposal would be used to try and persuade the EU.

“People say we have not got any cards,” the newspaper quoted an unidentified source familiar with the government’s thinking as saying.

“We have some quite good cards we can play if they start getting difficult with us. If they’re saying no passporting and high trade tariffs we can cut corporation tax to 10 percent,” the newspaper quoted an anonymous source as saying,” the source was quoted as saying.

Meanwhile British billionaire Richard Branson told CNBC that the British people have shot themselves in the foot by voting for Brexit.

“We’re already seeing disastrous consequences with the way the pound has dropped. This is a number of years before Brexit actually takes place,” the founder of Virgin Group told “Power Lunch” on Tuesday.

“There’s been very, very little to be gained from it and there’s been an awful lot to lose from it,” Branson said.

Branson pointed out that due to the currency drop, while Britain’s top 100 companies have seen short-term benefits on their dollar and overseas earnings, the rest of the business community isn’t as lucky.

“The bulk of British companies, small companies, medium size companies are suffering, and they will suffer. You’re going to find soon the British people are going to see the cost of boots going up. They’re going to see job losses and they will start to realize the consequences of what they voted for,” he said.

Warning before the vote that it would be a financial disaster, Branson has long been a critic of Brexit.

A case on whether British lawmakers, and not the government alone, must trigger the formal process of leaving the EU is now before London’s High Court and the decision to leave the European Union came in June.

Since the case may give the House of Commons a free vote on the matter, case is an important one to watch, Branson said.

“I think the Conservative Party, in order to try to hold that party together, will try to push it through despite the damage it will do to the country,” he said. He however noted that about two-thirds of the members of Parliament were against Brexit.

“That would be quite interesting, especially if it’s a hard Brexit. I think once people see the terms and the consequences of what’s happening, things could change,” he said.

(Adapted from CNBC)

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Categories: Economy & Finance

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