CBI chief: Corporation tax level "unsustainable"

News Article - 31 July 2006
Category: Business

The CBI's newly installed director general, Richard Lambert, has described the level of corporation tax in the UK as "unsustainable".

During a news conference, Mr Lambert said that the burden caused by the tax on UK businesses was one reason that they had become more cautious.

The CBI's distributive trades survey gave a mixed picture of the UK economy, with 44 per cent of retailers saying sales were up on a year ago while 37 per cent said they were down.

"If you look at the competitiveness of the UK economy, it has weakened in recent years and my own personal opinion is that current levels of corporation tax are unsustainable," he said.

He added that the Bank of England's Monetary Policy Committee, of which he was formerly a member, should be in no hurry to tighten interest rates.

Warning retailers to brace themselves for the coming months, he said: "Wage increases remain modest while unemployment is rising. Escalating fuel costs and higher household bills are also eating into disposable income."

"With continued speculation about an interest rate increase consumers are understandably cautious in their spending."

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