UK insists Brexit will not trigger race-to-bottom on taxation

UK finance minister Philip Hammond insisted taxation would stay near the European average after Brexit. [European Council]

The United Kingdom does not intend to lower taxes far below the European average in order to remain competitive after Brexit but rather expects to keep a recognisably European economic and social model, finance minister Philip Hammond claims.

Hammond himself suggested in January that Britain may have to change its economic model to remain competitive in the event that it left the European Union without having secured an agreement on market access.

In an interview with Le Monde published over the weekend, Hammond was asked whether Britain would play the low-tax card to remain economically attractive after Brexit.

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

“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.”

Britain threatens to undercut EU if Brexit plans fail

Britain warned on Sunday (15 January) it might undercut the EU economically if it cannot obtain both single market access and immigration controls, as Prime Minister Theresa May prepared her big Brexit strategy speech.

The comments were markedly different from Hammond’s responses in his January interview with German newspaper Welt am Sonntag, which were seen as a thinly veiled threat to use corporate tax as a form of leverage in Brexit negotiations.

Asked directly whether Britain would lower corporate tax, Hammond had said that while he hoped Britain would remain a European-style economy with corresponding tax and regulation systems, it may have to change its model if it left the EU without 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.

UK finance minister claims Brexit transition could last until 2022

Britain will try to keep as many aspects of its EU membership in place as possible during a transition period of up to three years after Brexit, finance minister Philip Hammond said on Friday (28 July).

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.