Sweden Warns UK Against Corporate Tax Cuts

During an interview on August 21, Swedish Prime Minister Stefan Loefven warned the UK against cutting corporate taxes or implementing similar competitive measures. He said that such moves would damage the relations with the EU states and make Brexit talks 'more difficult'. The UK's senior conservatives reacted with anger.

Background: UK Prepares for Brexit

The UK's Prime Minister Theresa May asked for more time as she puts together a team and prepares for the negotiations with the EU, which are expected to begin in the next year. The UK Chancellor of the Exchequer Philip Hammond previously mentioned that corporate tax cuts might be necessary to support the economy. George Osborne, the previous chancellor, had already set out plans to cut corporation tax from 20 percent to 15 percent.

Damaging Relations

The Swedish Prime Minister said that the UK should avoid any drastic steps to cut corporate taxes, or similar measures, as it prepares to start talks on leaving the EU. Such moves will damage relations with the European Union, he warned.

During an interview the Prime Minister said that "if the UK wants some time to think about the situation, this will also give EU countries some time. On the other hand, you hear about plans in the UK to, for example, lower corporate taxes considerably. If they, during this time, begin that kind of race, that will of course make discussions more difficult.”


Some of the UK Senior Conservatives showed anger over the words of the Swedish Prime Minister. Downing Street and the Treasury insisted that Britain should be free to set its own corporation tax. Owen Paterson, the former cabinet minister, pointed out that “the whole point about Brexit is we make our own laws.”

Steve Baker, a Tory MP and Brexit campaigner, said: “The UK is entitled to cut corporation tax rates. Of course we need to negotiate in an atmosphere of good faith, but the bottom line is, we’ll set our tax rates, thank you.”

Source: Business Times, The Times, Telegraph, RT

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