The UK government should reform corporate and personal taxes to soften the blow from an expected slowdown after Britain’s vote to leave the EU, British Secretary of State for Business, Innovation and Skills Sajid Javid said.
Javid told the Financial Times that the government needed to switch its focus from reducing the deficit to stimulating economic growth by introducing unfunded tax cuts to boost research and investment for companies.
Confidence in Britain’s economy has been rocked by the decision on June 23 by voters to leave the world’s largest trading bloc. The pound is trading at 31-year lows and the Bank of England has warned that the financial risks it highlighted ahead of the vote were starting to crystallize.
British Chancellor of the Exchequer George Osborne has said he plans to cut Britain’s corporate tax to below 15 percent and has also dropped his aim of turning Britain’s budget deficit into a surplus by 2020.
Javid backed Osborne’s softer approach to fixing the public finances.
He told the Financial Times that it was hard to predict what would happen to the deficit.
“Does it mean 3 percent becomes 4 percent or 5 percent? I don’t think anyone can say at this point,” he said.
Britain’s budget deficit was just below 4 percent of GDP in the fiscal year that ended in March.
Javid said that the government should double tax credits for research and development, exempt new plant and machinery from business rates and increase the annual investment allowance.
He said the threshold at which people start paying income tax should also rise by ￡1,000 (US$1,293).
As well as the signals from the government of help for the economy from lower taxes, Bank of England Governor Mark Carney has said he expects the central bank to provide more monetary stimulus over the summer.
On Tuesday, the British central bank lowered a requirement for banks to set aside money to cover losses.
It is not clear how long Osborne and Javid will remain in their jobs. British Prime Minister David Cameron has said he will resign by September and the ruling Conservative Party is in the process of choosing a new leader.
From India to China to the US, automakers cannot make vehicles — not that no one wants any, but because a more than US$450 billion industry for semiconductors got blindsided. How did both sides end up here? Over the past two weeks, automakers across the world have bemoaned the shortage of chips. Germany’s Audi, owned by Volkswagen AG, would delay making some of its high-end vehicles because of what chief executive officer Markus Duesmann called a “massive” shortfall in an interview with the Financial Times. The firm has furloughed more than 10,000 workers and reined in production. That is a further blow
Answering to a reported request by Germany to help address a chip shortage in its auto industry, the Ministry of Economic Affairs (MOEA) yesterday said that it was in talks with domestic chip suppliers. Foreign media over the weekend reported that German Minister of Economic Affairs Peter Altmaier had sent a request to Taipei to ask Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to cooperate more closely with German automakers to provide microchips and sensors, to bridge a shortage that has emerged over the past few months. The MOEA said that it had not yet received the request and could therefore not elaborate
FOCUS ON FOUNDRIES: An analyst said that some investors would be disappointed because they were expecting a larger announcement of a partnership with TSMC Intel Corp’s incoming chief executive officer Pat Gelsinger on Thursday pledged to regain the company’s lead in chip manufacturing, countering growing calls from some investors to shed that part of its business. “I am confident that the majority of our 2023 products will be manufactured internally,” Gelsinger said. “At the same time, given the breadth of our portfolio, it’s likely that we will expand our use of external foundries for certain technologies and products.” He plans to provide more details after officially taking over the CEO role on Feb. 15, but Gelsinger was clear that Intel is sticking with its once mighty
AWARENESS NEEDED: The central bank urged lenders to know their customers before undertaking business for them and to seek funding in conventional ways The central bank yesterday said that it would take action against four foreign lenders for their involvement in helping companies trade in the deliverable forward market in contravention of foreign-exchange regulations. Some grain merchants newly based in Taiwan have since July 2019 been practicing questionable currency-trading activity, with the help of branches and subsidiaries of six foreign banks, the monetary policymaker told an unscheduled news conference. Affiliated firms as of July last year completed currency-related deals they referred to as trading that totaled US$11 billion, which was not in sync with their real business needs, the central bank said after wrapping up