Hammond: UK to maintain European tax levels post-Brexit

31 Jul 17

Britain will not lower taxes far below the European average to be competitive, Philip Hammond has told a French newspaper.

The UK’s economy will be “recognisably European” and tax raised is likely to remain at the current level, the chancellor told Le Monde in an interview published over the weekend.

“It is often said that London would consider launching into unfair competition in terms of fiscal regulation,” he said. “That is not our project or our vision for the future.”

He added: “The amount of tax that we raise, measured as a percentage of GDP, is within the European average and I think we will remain at that level.

“Even after we have left the EU, the United Kingdom will keep a social, economic and cultural model that will be recognisably European."

This appears to be a change of stance after he hinted to the German paper Welt am Sonntag in January that corporate tax could be lowered if the UK left the EU without an agreement on market access.

“In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness,” Hammond said.

“We will change our model, and we will come back, and we will be competitively engaged.”

It appears the government could be relaxing its stance that “no deal is better than a bad deal for the UK” – set out in its manifesto for the snap election in June this year.

Hammond – who is currently in charge of the country while Theresa May is on holiday – has maintained no deal would be “a very bad outcome” for Britain.

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