fallen off investment commercial in Great Britain at the lowest rate of the rich countries in the Group of Seven, despite tax cuts for companies, raising doubts about the government’s plans as ministers pledge £ 30 billion in business support.
The Institute for Public Policy Research (IPPR) said a “race to the bottom” on the key rate of corporate profits tax has failed to spur investment and economic growth in Britain over the past 15 years, according to a report released by The Guardian on Tuesday.
These conclusions will raise new questions about the new government’s willingness to cancel the planned increase tax Companies at 25%, as of April, that former finance minister Rishi Sunak had started.
The British Prime Minister argues Liz Terraceand its finance minister, Kwasi Quarting, said low corporate tax rates could spark an investment boom in Britain to help drive economic growth towards a target rate of 2.5% per year. Quarting will confirm more details on the tax cuts next Friday in a tax and mini-budget plan it presents, the newspaper notes.
However, the think tank said the reduction in the main tax rate from 30% in 2007 to 19% in 2019, orchestrated by former Chancellor of the Exchequer George Osborne, did not spur more private investment or economic growth. faster.
Britain is going through a severe inflationary crisis in exchange for a slowdown in growth. According to analysts at JPMorgan, the livelihood crisis has just begun and Terrace’s plan to freeze the energy price caps will not work, as spending cuts will continue by 10%.
JPMorgan agrees with the Bank of England that the new government’s plan will raise interest rates faster, thereby delaying the risks of recession for some time rather than canceling them.
Despite repeated tax cuts at the lowest rate in a century, Britain lagged behind Italy and Canada, ranking at the lowest level of private sector investment in the G7 as a share of national income. Britain was ranked 28th in corporate investment among 31 members of a larger group of developed countries in the Organization for Economic Co-operation and Development, according to “The Guardian”.
Studies have shown that the corporate tax cuts used by successive conservative governments have had little effect on business investment and economic growth.
According to research by the Social Market Foundation, corporate tax cuts resulted in a net cost to treasury of around £ 73 billion between 2010 and 2018. In just one year, the increase in commercial investment outweighed the cost. , according to the research.
Official figures show that the level of investment in Britain is still 5.7% lower than before the pandemic, while economists warn that rising energy costs and very high inflation will reduce spending.
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