France’s finance minister has warned that the UK’s plan to slash corporate taxes could hit Britain’s negotiations with the EU following the country’s vote to leave the bloc, reports The Financial Times.
Michel Sapin said the initiative — which officials in both Paris and Berlin view as hostile — could affect Britain’s prospects of retaining the “European passport” that allows financial groups to sell their services and raise funds in the EU’s single market.
“I am not persuaded that this is a good thing for the UK,” the French minister said of Britain’s corporate tax plans at a press conference on Monday. “This will not change anything on the passport for instance. In fact, it’s not a good way to start a negotiation.”
Mr Sapin also criticised the “manners” of George Osborne, the UK chancellor who has promised to cut the corporate tax rate by five points to 15 per cent in an attempt to boost Britain’s attractiveness to business in the wake of last month’s referendum.
His comments echo remarks by Wolfgang Schäuble, Germany’s finance minister, who last week criticised the UK’s fiscal “race to the bottom”.
France and Germany are both concerned that the UK will be tempted to establish itself as a low-tax offshore jurisdiction in the EU’s outskirts in response to the Leave vote.
Britain’s corporate taxes are already lower than those in the two countries. While France’s socialist government has vowed to cut the corporate tax rate from 33 per cent to 28 per cent, Germany applies a 30 per cent rate. The EU average is 23 per cent.
Mr Sapin’s jab at Mr Osborne underlines Paris’s confrontational stance towards the UK after the EU membership referendum.