Osborne to Cut U.K. Corporate Taxes

LONDON—U.K. Treasury chief George Osborne plans to cut the corporation tax in the U.K. to just 15% or less in an effort to lure business investment as the economy reels from Britons' shock decision to exit the European Union.

Mr. Osborne announced the new tax target in an interview with the Financial Times published Sunday. The current rate is 20% and Mr. Osborne already planned to lower it to 17% by 2020, which would make Britain's corporate tax rate the lowest in the Group of 20 industrialized and developing economies.

A Treasury spokeswoman confirmed the new goal Sunday. In the interview, Mr. Osborne didn't give a time frame for introducing the new tax rate but changes to taxes and spending are usually announced toward the end of the year, in an annual financial statement to parliament, or in March, when the Treasury sets out its full fiscal plans on budget day.

The tax cut is part of a broader plan to boost the economy in the wake of last week's Brexit vote, Mr. Osborne said in the interview.

The Bank of England has made at least £ 250 billion ($333 billion) of emergency cash available to British banks to ward off any funding problems, and Gov. Mark Carney signaled in a speech Thursday that the central bank may cut interest rates in the U.K. over the summer to support growth.

Mr. Carney said he expects the economy to slow in the coming months as uncertainty over the U.K.'s prospects outside the EU weighs on business and consumer confidence and delays investment.

The U.K.'s economic outlook has been further clouded by political uncertainty triggered by Prime Minister David Cameron's decision to stand down in the fall. Mr. Osborne isn't standing in the race to succeed Mr. Cameron and in the interview didn't say which of the candidates he preferred.

Home Secretary Theresa May and Justice Secretary Michael Gove are among those competing to replace Mr. Cameron as Conservative Party leader and prime minister.

It isn't clear whether Mr. Osborne will remain as Treasury chief in a new administration. He said last week the government must maintain its "fiscal credibility" by pressing ahead with efforts to close the U.K.'s budget deficit but conceded his goal of eliminating the shortfall entirely by 2020 would have to be abandoned.

Write to Jason Douglas at [e-mail]

(END) Dow Jones Newswires

July 03, 2016 21:05 ET (01:05 GMT)

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