London Financial Report, June 24 2010
In London, the FTSE 100 closed down 1.5 percent at 5100 at market close on Thursday.
In response to UK’s deficit, Chancellor George Osborne delivered a new emergency budget on Tuesday.
In the new budget, the rate of corporation tax will be reduced from 28 percent to 24 percent over the next four years, falling one percentage point each year.
The Conservative Party argue that this will open Britain for business and will have a positive impact on investor confidence. According to official estimates, this cut will cost £4.1bn in four years in lost tax receipts.
The measure will be partly financed by cuts to capital allowances. This reduction in investment allowances has been argued by analysts to have a negative impact especially on smaller companies.
Capital gains tax is to be raised from eighteen to twenty-eight percent for higher-rate taxpayers, less than the widely feared 40 to 50 percent rate. A relief for investors, especially basic-rate taxpayers, who will continue to pay capital gains tax at 18 percent. However, the UK will have one of the highest rates in Europe and analysts have argued that it could have a negative impact on investment.
Linoy Markram, NTD News