Britain is ready to become an aggressive tax haven if the EU fails to agree the right Brexit trade deal, Downing Street has warned.
Theresa May’s official spokeswoman said that the UK would prefer to have a “mainstream” tax regime, but was poised to slash rates if Brussels failed to compromise.
Chancellor Philip Hammond declared on Sunday that Britain would not “lie down” if Germany and others refused to agree as much access as possible to their markets once the UK has quit the EU.
Asked directly for the PM’s own stance, her spokeswoman said: “She shares the view that the Chancellor set out.
“We want to remain in the mainstream of recognised, European-style tax systems - but if we are forced to do something different, then we stand ready to do so.”
The pound continued to fall on Monday as currency traders reacted to media reports that May will threaten a ‘hard Brexit’ of opting out of the EU single market and customs union if it can’t get a trade deal that allows curbs on migration.
Ahead of May’s major speech on Brexit due on Tuesday, No.10 insisted that it had not been behind remarks that a “market correction” was expected on sterling.
The PM’s spokeswoman refused to comment on the level of the pound, even though US President Elect Donald Trump had told The Times columnist Michael Gove that its fall would make British exports more attractive.
Downing Street was cautious about claims that Trump could sort a UK-US trade deal “quickly”, stressing that “we can’t enter into or sign a free trade agreement while remaining a member of the EU”.
Gove had suggested that Trump could have a deal ready to go from 2019, when Brexit is expected to finally take place, but No.10 said the UK could only have “scoping discussions” before then.
Hammond sparked fresh speculation of a hard-line stance when asked by German newspaper Welt am Sonntag if he was ready for Britain to become “the tax haven of Europe” if it failed to get the EU trade deal it wanted.
“The British people are not going to lie down and say ‘too bad, we’ve been wounded’. We will change our model and we will come back, and we will be competitively engaged,” he replied.
Jeremy Corbyn told the Andrew Marr Show on Sunday that May was edging towards turning the UK into an ‘offshore’ economy.
“She appears to be heading us in the direction of a sort of bargain basement economy on the shores of Europe where we have low levels of corporate taxation,” he said.
“We will lose access to half of our export markets, it seems to me an extremely risky strategy.”
Corbyn added that many Brexit voters had backed Leave in the EU referendum last June because they were unhappy about corporate tax avoidance.
“The very wealthiest in this country outsource and offshore their profits into tax havens around the world..we have a growing gap between the richest and the poorest...that was one of the messages in the EU referendum campaign.”