LONDON: UK could overhaul its economic model and pursue policies to transform the country into a corporate tax haven if it is locked out of the European single market by the EU, British Chancellor Philip Hammond suggested.
According to details, in a warning to the other 27 EU countries, Hammond said Britain could abandon its European-style taxation system and regulations if a favorable deal on single market access isn’t negotiated with Brussels, telling German newspaper Welt am Sonntag that the country could “become something different.”
The chancellor made the comments after being asked: “the impression on the European continent is that your government sees the future business model of the UK as being the tax haven of Europe.”
When asked to further clarify his comments, the Chancellor told the newspaper: “We could be forced to change our economic model, and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.
The veiled threat presents the EU with challenges ahead of trade negotiations, with European leaders keen to make sure the UK doesn’t secure what is seen to be a positive deal upon leaving the bloc, in order to quash Euro skeptic movements within the bloc.
Responding to Hammond’s comments, UK opposition leader Jeremy Corbyn said the government was risking a “trade war” with the EU, adding that it was pursuing an “extremely risky” strategy with its Brexit rhetoric.
He said that Prime Minister Theresa May “seems to be heading in the direction of a bargain-basement economy on the shores of Europe, where we have low levels of corporate taxation.
Dutch Deputy Prime Minister Lodewijk Asscher also raised concern about the UK’s taxation issues, threatening to veto any Brexit trade deal unless Britain agrees on “firmly tackling” tax avoidance, fearing a “race to the bottom” on the issue.
British Prime Minister Theresa May is expected to further outline the UK’s Brexit plans this week.
