Investment
Low UK corporation tax has failed to boost investment – report – Reuters
LONDON, Sept 20 (Reuters) – Britain’s low headline rate of corporation tax has failed to boost business investment, which lags behind that of all its major peers, according to a report on Tuesday which comes as the government prepares to reverse a planned rise.
Britain’s 19% corporation tax rate – the lowest in the Group of Seven (G7) large, rich nations – had been due to rise to 25% in 2023 under plans announced last year by former finance minister Rishi Sunak.
However, opposing the rise formed a major part of Liz Truss’s successful campaign to defeat Sunak in the contest to succeed Boris Johnson as Conservative Party leader and Britain’s prime minister.
New finance minister Kwasi Kwarteng is expected to confirm this in an emergency fiscal statement on Friday, where he gives more details about Truss’s plan to support the economy in the face of surging energy bills.
Truss said during her campaign that keeping corporation tax low was vital to attract investment, but a report from the Institute for Public Policy Research (IPPR) showed past reductions in the tax rate had not led to more investment.
Britain cut its headline rate of corporation tax rate from 30% in 2007 to 19% in 2017, but in 2020 private-sector investment was the lowest in the G7 at 9.8% of gross domestic product. Across 31 mostly wealthy nations in the OECD, Britain had the fourth-lowest business investment in 2020.
“Slashing corporation tax is just a continuation of a failed race to the bottom that hasn’t delivered for the UK economy,” said George Dibb, head of the Centre for Economic Justice at the IPPR, which describes itself as a progressive think tank.
Headline corporation tax rates do not always give a clear sense of the overall business tax burden in a country, and some countries with high rates offer widespread exemptions.
Before he resigned as finance minister last month, Sunak had been working on measures to reshape business taxation to promote investment.
Low business investment is one of the main reasons economists give for poor productivity and very slow growth in living standards since the late 2000s.
Weak demand after the global financial crisis, followed by years of uncertainty over the consequences of Brexit, are among the reasons economists give for Britain’s poor investment performance, alongside difficulties measuring investment in some services industries Britain specialises in.
Our Standards: The Thomson Reuters Trust Principles.
Economy
S&P/TSX composite down more than 200 points, U.S. stock markets also fall
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
Economy
S&P/TSX composite up more than 150 points, U.S. stock markets also higher
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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