The reduction from the current 20% rate will be part of the chancellor’s five-point plan to avert a DIY recession

This article is more than 4 years old

This article is more than 4 years old

George Osborne is planning to cut corporation tax to below 15% in a bid to encourage businesses to invest in a Britain outside the European Union.

The chancellor said the move was part of a five-point plan to breathe life into the economy, following his warning before the referendum that a Brexit vote would trigger a DIY recession in the UK.

“We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt,” Osborne told the Financial Times, adding that the UK faced a “very challenging time”.

The chancellor did not provide a specific timeframe for cutting corporation tax to below 15%, but said Britain should “get on with it”, to reassure investors that the UK is open for business.

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Osborne had previously announced plans to cut corporation tax on a phased basis from its current level of 20% to 17% in 2020. By cutting it further, Britain would be competing with countries such as Ireland, where corporation tax is 12.5%.

As well as lowering corporation tax, the chancellor said his five-point plan included ensuring support for bank lending; a push for more investment in China; a focus on delivering the northern powerhouse: and maintaining Britain’s fiscal credibility.

On Friday, Osborne dropped his target of returning the public finances to a surplus by 2020, effectively abandoning one of the central pillars of his economic policy as chancellor.

“The government must provide fiscal credibility, so we will continue to be tough on the deficit, but we must be realistic about achieving a surplus by the end of this decade,” he said.

Revealing his five-point plan to shore up the economy following the Brexit vote, the chancellor said he wanted to play a leading role in shaping the country’s economic future.

Osborne is not a candidate in the Conservative party leadership contest and said he was “not backing anyone at the moment”.

