By Jenny Gross
LONDON -- British Prime Minister Theresa May said Monday the government would increase spending on science and technology and cut the corporate tax rate to the lowest level among the world's top 20 economies, in an effort to head off uncertainty stemming from the U.K.'s decision to leave the European Union.
But in unveiling the strategy, she warned business leaders she planned to tighten corporate governance rules, including over executive pay and accountability to shareholders.
"Just as government must open its mind to a new approach, so the business community must, too," Mrs. May said in a speech to the Confederation of British Industry, an umbrella group that represents 190,000 businesses. She said her new plan for business was about the government helping Britain overcome the "longstanding challenges in our economy that have held us back for too long."
Following Britain's vote in June to leave the EU, Mrs. May is seeking to attract foreign investment, while at the same time reaching out to voters in Britain's struggling industrial heartland who are angry about inequality and skeptical about the benefits of globalization.
Mrs. May has given few details about how she sees the U.K.'s relationship with the bloc once it leaves, likely sometime in 2019, except that she wants to curb migration while maintaining free trade with the EU. Her European counterparts have said the U.K. can't cherry pick what it likes while opting out of other requirements, like the principle of free movement of people that allows EU citizens to live and work anywhere in the bloc.
Mrs. May didn't specify what rate she foresaw, but her comments come after then-Treasury chief George Osborne announced after the Brexit vote in July that he planned to cut the corporate tax to 15% or lower. The government already has in place a plan to cut the rate to 17% by 2020.
In the U.S., the federal government taxes corporate profits at 35%, although Donald Trump's victory is expected to embolden Republicans to further slash taxes for individuals and businesses. He has said he would cut the corporate tax rate to 15%.
Mrs. May said she recognized that leaving the EU brought uncertainty for business, but that the right approach was to set out Britain's negotiating position on extricating itself from the bloc and not to rush ahead without doing the groundwork.
She said she would give businesses an extra GBP2 billion ($2.5 billion) a year by 2020 to support research and development.
Rajesh Agrawal, the deputy mayor of London responsible for business, said companies in the capital city, wanted continued access to the European single market firms and an open immigration policy. "Let's not rush this because of party pressures or whatever -- because it is perhaps the most important political decision of our lifetime, and it is very important to get it right. The stakes are very high," he said.
A European Commission spokeswoman said it was too early to comment on Mrs. May's plans.
Nicholas Winning and Viktoria Dendrinou contributed to this article
Write to Jenny Gross at email@example.com
(END) Dow Jones Newswires
November 21, 2016 12:15 ET (17:15 GMT)
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