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British Prime Minister Theresa May pledged on Monday to address business concerns that the UK could fall off a “cliff edge” into uncertain trading conditions after leaving the EU, pledging to have the lowest corporate tax in the G20.
Speaking to business leaders at the CBI, a leading business organisation in Britain, May reiterated her commitment to having the lowest corporation tax among the world’s 20 largest economies.
Under plans laid out by former Chancellor George Osbourne, Britain’s conservative government was already set to cut the headline rate from the current 20 percent to 17 percent by 2020.
May also said the government would review the support given to innovative firms through the tax system “because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation.”
Asked about the possibility that the United States could cut rates to as low as 15 percent and whether Britain would match that, May’s spokeswoman said any such talk was “speculative”.
Asked if the government would rule out a cut beyond 17 percent she said: “What we have set out is plans to take it to 17 percent”.
May moved to ease concerns among company bosses alarmed by the impact of Britain’s exit from the EU following the June 2016 referendum, hinting at a transitional deal to prevent the British economy from falling off “a cliff edge”.
But she would not reveal more of her negotiating hand before she triggers Article 50 of the EU’s Lisbon Treaty to launch two years of formal divorce talks, saying business leaders should understand better than anyone that she did not want anything to jeopardise winning the “right” deal.
Asked about business calls for a transitional deal, she said: “We want to get the arrangement that is going to work best for the UK and the arrangement that is going to work best for business in the UK.”
“I am conscious that there will be issues that need to be looked at … that people don’t want a cliff edge, they want to know with some certainty how things are going to go forward,” she said. “That will be part of the work that we do in terms of the negotiation.”
Her spokeswoman later said: “There are a whole range of issues that are being worked through as we prepare for the negotiations, with a focus of looking at how we get the best deal for the UK.”
EU officials say they have always assumed that Britain would need some transitional deal to bridge the gap between the withdrawal treaty and a new one setting out a long-term relationship, which they expect to take many years to negotiate.
‘When the clock strikes midnight’
May’s words seemed to be a direct response to the president of the CBI, Paul Drechsler, who said businesses needed certainty over Britain’s future relationship with the EU’s single market and immigration rules for “European talent”.
“And there’s another important question: What happens the day after Brexit? When the clock strikes midnight, and our two years negotiating time is up. Today businesses are inevitably considering this cliff-edge scenario—a sudden and overnight transformation in trading conditions,” he said. “If this happens firms could find themselves stranded in a regulatory no man’s land.”
Others echoed the business chief’s concerns.
“I’m not too optimistic about Brexit,” a representative from the German engineering firm Bosch told AFP, speaking on condition of anonymity. “I don’t see things moving in the right direction”.
Risking the ire of pro-Brexit campaigners
May, who was appointed prime minister shortly after Britain voted in June to leave the EU, has been clear that she will complete Brexit, but she has offered little detail.
Some pro-Brexit campaigners have warned the prime minister that she risks betraying the “will of the people” if she allows any delay to Brexit.
“Businesses want certainty as soon as possible, which is why Britain must leave the EU within a maximum period of two years after triggering Article 50 — no EU deal is better than a bad deal,” said Richard Tice, a businessman and co-chairman of the campaign group Leave Means Leave. “A transitional deal will fuel more uncertainty and leave Britain in limbo.”
Keen to make sure her government stays on message, May has silenced her ministers, some of whom have given the strongest hints yet that she is not ruling out a form of transitional agreement with the EU.
In parliament on October 20, May’s Brexit minister, David Davis, said the stability of the London financial district and markets was “absolutely central” and the government would do “anything necessary”.
“I am sure that everybody here in this room who’s been involved in negotiations know that you don’t set out absolutely everything that you want to do right at the beginning of the negotiation,” she said. “So when I am able to make announcements about decisions … then I will do so.”