British finance minister Philip Hammond says Britain will not slash taxes after Brexit. The move might help negotiations for a trade deal with the EU but could disappoint businesses. Silvia Antonioli reports.
In another concession to a softer Brexit British finance minister Philip Hammond said the UK will not slash taxes as Britain splits from the EU. This comes only days after Hammond outlined his vision for a smooth transition (SOUNDBITE) (English) UK FINANCE MINISTER, PHILIP HAMMOND, SAYING: "" As we leave the EU, and the job will be done on the 29th of March 2019, the over-riding concern is to make sure that we go through this process in a way that avoids disruptive cliff edges for business and for individual citizens." In an interview with French newspaper Le Monde, Hammond said the UK will not cut taxes much below the European average after the divorce - and will rather keep a typically European economic and social model. His position has moved significantly since earlier this year, when he suggested Britain might lower corporate tax to remain competitive. The new approach is likely to please the EU and help with a trade deal negotiation. But others might be disappointed. SOUNDBITE (English) CHIEF ECONOMIST, WORLD FIRST, JEREMY COOK, SAYING: If it stands that the UK doesn't need or doesn't feel the need to tempt businesses into bricks cities UK by using corporation tax you'd have to say why that. Why would businesses come here especially if trade ties are going to be very very difficult." Last week Hammond also suggested that there would not be major changes to migration rules after Brexit. This put him at loggerheads with Trade secretary Liam Fox and other Conservatives who have called for tougher border controls. Prime Minister Theresa May was seen as reasserting her power as she made clear freedom of movement will indeed end in March 2019. In the meantime British companies' optimism in the economy has slipped to the lowest in 6 months, according to a survey carried out by Lloyds Bank. Businesses might be even less optimistic now that the prospect of a lower tax bill seems to evaporate.