Editorial: Beware of our drift towards a high tax economy


In recent years, Emmanuel Macron and other French leaders have gone to great lengths to attract international companies across the Channel to French soil.

It has gone from sublime (investment dinners in Versailles) to ridiculous (‘Normandie Times’ advertisements in British newspapers looking for trendy entrepreneurs … allergic to post-Brexit tariffs). In the city at least, little of it worked; our competition remains New York and Singapore, not Paris.

It is therefore undoubtedly with some relief that Emmanuel Macron can wake up today and discover that we are about to simplify his arguments a little. If the UK has always had an advantage, it is because we have always rewarded hard work and success more than our Gallic cousins. It may not last.

The research reported at the bottom of this page suggests that it won’t be long before the UK’s tax competitiveness drops below that of France. Growing and innovative economies like Estonia and Latvia are leading the way in Europe – the Netherlands will be more than a dozen places ahead.

After Brexit, the gossip courts warned that the Tories wanted to turn Britain into Singapore-on-Thames. At this rate, it’s more like Madrid-on-the-Medway. We need to be more ambitious.

Unfortunately, the direction of travel is unlikely to change much in next week’s budget. The bank surcharge reduced to 3% is a sign of some progress, but the victory will simply be Rishi Sunak curbing the spending ways of his colleagues.

The Chancellor should therefore remember the uplifting tale of the complacent frog. Plunged into a pot of boiling water, it will surely jump. But gently boil some water with the frog already in the pot, and it will sit there as the temperature rises, puzzled by its impending end, until it delivers its final, too late, “peak”. and desperate.

We must beware of our gentle drift towards a high tax economy.

Read more: Editorial: What the City can learn from succession… and what it shouldn’t


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