America has taken a dramatic step towards becoming more attractive to business as the Senate approved the biggest tax cut for 31 years.

US corporation tax will drop from 35 per cent to 20 per cent under Donald Trump’s overhaul which has been backed by Congress.

The move piles pressure on Britain to increase its competitiveness as the country seeks business and investment after Brexit.

America will have a corporation tax rate just 1 point higher than Britain’s 19 per cent once the change is adopted. It is currently 16 points higher.

Other new tax changes discourage US businesses from moving their profits overseas, further enhancing the country’s corporate appeal.

Mr Trump predicted companies would continue to return to America as he heralded his "historic" tax cuts.

“We're going to grow the country, we’re going to grow jobs, we're going to be growing everything,” Mr Trump said in New York.

“We have companies now that are pouring back into our country, even before this. We’ve just set [economic] records in so many different ways.”

