British Chancellor George Osborne has announced cuts in the country's corporation tax rates in his Budget speech in the House of Commons. He said he would cut the corporation tax rate to 26% from next month. A one-point cut to 27% had already been planned. In addition, the Chancellor said the rate would be cut by one point in each of the following three years, bringing it to 23%.
He told MPs other countries had been 'quite deliberately' making their tax systems more competitive to attract multi-national companies. The UK's bank levy rate is to be adjusted to offset the cut in corporation tax.
Mr Osborne said forecasts from the independent Office of Budget Responsibility indicated that the UK economy would grow by 1.7% this year, lower than the previous 2.15 forecast, due to a weaker than expected final quarter of last year and higher oil prices. Growth would rise to 2.5% next year and 2.9% in 2013, according to the OBR. The forecasts show that the annual inflation rate will remain between 4% and 5% this year before falling next year. He said UK borrowing this year would be below target at