Corporation Tax to be HALVED to persuade banks to stay in UK
Under the secret plan, the UK would cut the tax’s rate from 20 per cent to 10 per cent if EU rivals decided to block a free trade deal with the UK.
The tax will also be halved if the EU refuses to give financial services firm access to the European market.
Downing Street believes that the move would encourage firms to stay and even make the UK a magnet for new companies.
The plan has been taken as the Government is increasingly concerned that the other 27 EU states will give Britain a hard time about getting a Brexit deal to go in its own interest.
A senior European source has said: “The British did not take seriously our claim that we will simply not engage before they start the formal process, but I think now they have realised the reality of their position.”
The cut in corporation tax would go alongside efforts to ensure that companies would pay the lower rate in full.
This could give companies such as Amazon an incentive to go onshore.
The Brexit minister, David Davis, has admitted that a non-amical separation from the EU under World Trade Organisation rules would send the UK economy off a “cliff edge”.
In a European Council summit, Theresa May vowed that the UK will remain a strong partner to the EU.
She said: “The UK is leaving the EU but we will continue to play a full role until we leave and we’ll be a strong and dependable partner after we have left.”
Following the referendum, the former chancellor George Osborne said that the UK’s tax rate should fall below 15 per cent.
A spokesman for No 10 said no formal proposals had yet been put forward for a UK corporation tax cut.