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Corporation tax may be put on hold as Stormont Executive urged to 'deal with this uncertainty'

Findings of an EY survey into corporation tax in the north. But the fiscal power may now be put on hold
Findings of an EY survey into corporation tax in the north. But the fiscal power may now be put on hold Findings of an EY survey into corporation tax in the north. But the fiscal power may now be put on hold

THE phasing in of a 12.5 per cent rate of corporation tax from April 2018, which is seen as the north's flagship economic development policy tool, may have to be put on hold, it has emerged.

Cutting the business tax rate to the same level as that in the Republic was seen as a carrot to lure fresh foreign investment, with claims that 32,000 jobs could be created and an extra £4 billion injected into the north's economy over the next 15 years.

But until the implications of the EU withdrawal are clarified, it seems likely the cut - which was 20 years in the making - won't happen, because the fiscal power being divested to Stormont was always predicated on single market access.

While arrangements for the reduced rate due are subject to conditions being met by Stormont, it is also to conditions which will not now apply when the UK leaves the EU.

In particular, the main condition that the Westminster block grant to Northern Ireland has to be reduced to reflect the corporation tax concession will no longer apply.

The uncertainties following the Leave vote are now so great that there may be a temptation at Stormont to do nothing until UK-wide negotiations start to create a clearer picture.

But Northern Ireland Chamber of Commerce and Industry chief executive Ann McGregor insists there has to be a "rapid response" from the Executive on this and other economic-related issues.

She said: "There will be a degree of uncertainty and disruption in the months ahead, especially around certain trade issues, but the government must respond rapidly to avoid any uncertainty for business and potential damage to trade and inward investment."

She added: “Northern Ireland is forging out a place in the global economy as well as trading relationships with European neighbours and that work must continue.

"We are now in a unique position as the only part of the UK with a land border with the EU and that will throw up challenges in terms of new trading arrangements.”

The EU referendum had caused many companies to stall on decision-making, and the exit outcome is understood to have shattered confidence among many businesses in Northern Ireland.

Indeed recruitment consultant Max Mackin at Reactive Recruitment told the Irish News: “We’ve heard rumblings, for instance, of large employers such as Citi Group suggesting they will pull out of Belfast if we left the EU, so this is a very worrying situation.

"We anticipate thousands of jobs in Northern Ireland could be at risk as a result of the referendum outcome.”