A NO-DEAL BREXIT will turn Britain into the “largest tax haven” in Europe, helping the country’s finance recover from the strains it will experience in the short term, two top economists said.
New EU rules to eliminate the main loopholes used in corporate tax avoidance come into force on 1 January 2020. The Commission has put in force new rules to eliminate the most common corporate tax avoidance practices.
As of 1 January 2019, all Member States shall apply new legally binding anti-abuse measures that target the main forms of tax avoidance practiced by large multinationals.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The Commission has fought consistently and for a long time against aggressive tax planning. The battle is not yet won, but this marks a very important step in our fight against those who try to take advantage of loopholes in the tax systems of our Member States to avoid billions of euros in tax.
The UK will become a tax haven “soon” after Brexit if the country leaves the EU without a deal. Speaking to Focus in Germany, the experts said: “In the case of a hard Brexit, we expect to soon have the largest tax haven in the middle of Europe – Britain. Attractive tax rates will attract private and commercial capital from around the world in the tax optimization competition, and the UK will prosper.”
This transformation of Brexit Britain from Europe’s financial hub to tax paradise with convenient tax rates will compensate the disruption and damage to the British economy will experience in the immediate aftermath in case of a no-deal, Mr. Friedrich and Mr. Welk said.
Warning a hard Brexit will have “significative consequences” both the EU, in particularly Germany, and the UK, the economists said: “In particular, one of the UK’s key industries – the financial industry – will have to prepare for the worst in the case of a hard Brexit.
“Jobs in the financial center of London will be lost. In the future, British banks will need legally independent units in one EU country for their services, such as deposit and lending business.
“Whether and, if so, how easy it is for bankers in London to obtain the necessary work permits within EU countries is still completely open.
“The International Monetary Fund expects growth losses of four percentage points in five years for the UK economy.
“In the short term, foreign trade will get into a pickle.
“The pound will depreciate significantly again, and inflation will rise.
“Yields on British government bonds will also rise, with consequences for the state budget. The stock markets will significantly lower downwards.
“The extent to which this will spill over into the markets within the EU cannot be clearly predicted. However, we expect significant consequences.
“A significant increase in unemployment on the island is expected.
“This will have far-reaching consequences for the real estate market, especially in the lower and middle price segment.”
But the UK’s economy will manage to recover in the long-term, they continued, “due to the sharp depreciation of the British currency and new trade deals with various countries.”
The economists urged the parts to act as quickly as possible and reach a deal that can be approved by British Parliament, which on January 15 soundly rejected the Withdrawal Agreement struck by Brussels and Theresa May.
And, worried about the devastating consequences a no-deal could have on Germany considering the tight links between London and Berlin, they accused the EU of “being stubborn” for refusing to cave in and reopen the deal.
They said: “Unfortunately, in our view, the likelihood of a hard and dirty Brexit with drastic consequences for Britain, the EU, but also for Germany is increasing every day, as the EU is being stubborn and categorically rules out renegotiations.”