During his budget statement on Wednesday, British finance minister George Osborne introduced his plan to save the U.K. economy: win over major businesses by slashing the corporate tax rate to 22 percent.
The tax cut is part of a larger effort to deal with the U.K.’s struggling economy.
"Together, the British people will share in the effort and share the rewards," Osborne said. "This country borrowed its way into trouble, now we're going to earn our way out."
Economic growth this year will be 0.8 per cent, up from a previous forecast for 0.7 per cent, according to the Office for Budget Responsibility.
"By 2014, Britain will have a 22 percent rate of corporation tax," Osborne promised.
He touted the target tax rate as "a headline rate that is not just lower than our competitors, but dramatically lower: 18 percent lower than the US; 16 percent lower than Japan; 12 percent below France and eight percent below Germany," writes The Washington Examiner’s Joel Gehrke.
“All of these tax reductions will help win business for Britain,” the finance minster told Parliament yesterday. “From next month, Britain will have a corporation tax rate of just 24 percent. And we will continue with the two further cuts planned next year and the year after. So that by 2014, Britain will have a 22 percent rate of corporation tax. The biggest sustained reduction in business tax rates for a generation.”
He continued, saying the tax cut would act as:
An advertisement for investment and jobs in Britain and a rate that puts our country within sight of a 20 percent rate of business tax that would align basic rate income tax, the small companies rate and the corporation tax rate.
Osborne is confident that the measure will work.
"Not only will this help stop premium British TV programs...being made abroad, it will also attract top international investors like Disney and HBO to make more of their premium shows in the U.K.," Osborne said.
Osborne said Britain was likely to avoid a technical recession, officially defined as two consecutive quarters of negative growth. In the last three months of 2011, Britain contracted by a quarterly rate of 0.2 per cent. He outlined a range of measures he hoped would kick-start growth. A cut in the corporation tax rate by a further percentage point in April takes the rate down to 24 per cent. By 2014, he said the rate would be 22 per cent.
The Associated Press contributed to this report.