Dean Turner, economist and spokesman for the UBS UK investment team, said that he felt most city firms would want to stay closely tied to EU rules post-Brexit, despite Prime Minister Boris Johnson’s suggestions that cuts in regulation and tax could boost the country’s financial-services industry on the post-Brexit global stage.
Some commentators have speculated that such a move could mean the UK itself becomes a rival ‘offshore centre’ to Jersey, but Mr Turner said that he felt that this was not the mood music in the City.
‘I don’t think Singapore-on-Thames was ever a viable proposition because very few people want it, especially within the financial-services industry,’ said Mr Turner.
‘Various industry bodies are reluctant to diverge too much from EU regulation. I have always been very skeptical about this.’
In last week’s Budget, UK Chancellor Rishi Sunak announced a corporation tax hike from 19% to 25% in 2023, with a view to paying off the cost of Covid-19.
Mr Turner said that even this proposed hike in corporation tax would leave the UK competitive on the global stage, despite some concerns being voiced about the move.
‘The Chancellor and the other politicians have been keen to point out 25% corporation tax is still the lowest in the G7,’ he said.
‘I think there’s going to be quite a big push to maintain that , quite frankly. There will be some eyebrows raised, but I suspect the potential fallout from this will be quite limited.’
He added that he felt the increase to 25% might also not even be imposed in 2023, depending on how the economy recovered from the pandemic.
‘There is a chance, and I would not be surprised, if in the March 2023 Budget, he [Rishi Sunak] stood up and said, “Well, you know what? We don’t need to go to 25%”,’ he said.
‘We need to go into something a little bit less than that because of our good stewardship of the economy, investment level recovery, the picture’s looking a little bit better and so on. He’s built a little bit of wiggle room in there, I would argue.’
On the whole, Mr Turner said that he welcomed many of the measures in last week’s budget, such as ongoing business support and investment incentives, like the ‘super-deduction’ which will allow businesses to offset 130% of their spending on plant and machinery against their taxable profits for the next two years.
‘The general message here is to really push the economy over the next two years or so. To ensure that the furlough scheme is in place and ensure support measures are in place,’ he said.
‘That will crucially mean that the unemployment rate doesn’t spike. The investment-led super-deduction that he’s announced in my mind is also a good thing.
‘We’ve lost a lot of output in the UK and we want to get that back as quickly as we can.’