Jeremy Hunt acknowledged on Monday that British corporation taxes are too high. Business leaders called on the government not to break its promises to repair ties with private sector.
The UK chancellor, speaking at an event for 250 business leaders to counter Labour’s charm offensive in the UK, said that the economy must grow faster to lower taxes.
“The tax burden has become too high.” Hunt acknowledged the backlash against the government’s decision this month to raise corporation tax from 19% to 25% at Business Connect. “The only way to reduce the tax burden is by growing.”
The prime minister declared himself “unashamedly business-friendly” but he was repeatedly asked about their growth and trade strategy, even though he and Rishi sunak had promised to “listen” to the private sector and “engage”.
The event saw a wide range of demands, from reintroducing tax breaks for shopping by overseas visitors to a better cooperation with businesses and more “concrete actions” by the government.
Gerry Murphy, chairman of luxury goods brand Burberry said that the withdrawal of value-added tax breaks for UK shoppers from overseas has made the country one of the least appealing shopping destinations in Europe.
He added that “the UK has the weakest recovery out of all major [European] Burberry markets.” We are actively exporting our business to continental competitors as a direct result of this policy.
Romi Savova is the chief executive officer of financial services firm PensionBee. She said: “Many leaders of business have engaged with government through multiple events, and we are experiencing a sense of Groundhog Day while waiting for concrete policy development.”
Conservative Party insiders admit privately that Sir Keir starmer, Labour leader and shadow chancellor Rachel Reeves have led a highly effective charm offensive in the business world over the past few months.
Sunak’s selection of former Morgan Stanley executive Franck Petgas as his business and investment advisor is a sign that the government has begun a new initiative to improve its relations with corporate leaders.
Sunak announced 100mn pound sterling in government funding to a taskforce aimed at increasing Britain’s artificial intelligence capabilities. This area is known as “foundation model” and is used by chatbots like OpenAI’s ChatGPT.
Prime Minister said he will consider the request to reinstate the VAT exemption. However, government insiders claim that ministers are unlikely to make such a decision, as it could cost PS2bn per year.
Hunt said that the decision to scrap the tax breaks was the right one, given the costs.
The chancellor said that it was correct to impose a windfall on the profits of energy companies, but that he will keep “a dialog going.” . . Because we need to unlock investments in the North Sea”.
Many attendees expressed positive feelings about the event on Monday, but some felt that Sunak should follow up his “listening exercise” with policies that are business-friendly.
Sir Martin Sorrell (founder of S4Capital and a marketing veteran) said Sunak was “very good at detail and knowledge”, but had to deliver on business.
CS Venkatakrishnan (CEO of Barclays Bank) asked what the government and businesses could do to mobilize private capital.
The fashion designer Anya Hindmarch warned that the UK could easily lose its competitive edge in its creative industries, and called for support from government.
Sunak said that the government is promoting investment through the lowest corporation tax rate among the G7 nations, combined with a “full expense” tax reduction on capital expenditures. He added that the country was the best place in the world to invest because it had the lowest corporation tax rate among G7 nations.
He said that the UK also needed more innovation, “because it’s the best driver of long-term growth”. This is why the government increased its investment in R&D.