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George Osborne looks to reduce corporation tax

While George Osborne has been accused of bringing in a budget which is antigrowth for the UK business arena his promise to reduce corporation tax next year to 27% and a further 1% each year for the next three years has been well received by the business arena. Indeed we will also see corporation tax for small companies reduced to 20% which could prove vital in the short to medium term as businesses look to maintain as much liquidity within their operations as possible.

While many would argue that set against a backdrop of tens of billions of pounds of spending cuts in the public arena a reduction in corporation tax is of little consolation, it will have a longer-term positive impact on the business arena. There is also the hope that, a forlorn hope in the eyes of many, a reduction in public-sector investment may create a vacuum for the private sector, although time will tell whether this actually materialises. It is difficult to forecast the benefits in the short term with regards to the reduction in corporation tax set against potential economic difficulties over the next few years. However, there is a belief that George Osborne has at least attempted to balance public sector investment savings and tax increases against the general economic trend in the short to medium term. Whether his figures are correct is a very different matter!

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