Mr Hammond announced last Wednesday an allocation of additional £1.5bn in each of the next two financial years for Brexit preparations, he also stated that he was ready to invest more money if it were required.
This move is being planned to provide a stimulus to the economy in 2019-20. Most of the MPs see this measure as a very smart approach because it will preserve the UK interests in any possible scenario. In fact, it has been welcomed by Eurosceptic Conservative who said this approach will prepare the UK for a “no deal” perspective and for more autonomy from the EU.
Budget officials did not mention where the £3bn was expected to go, insisting that government would have to understand where to allocate the money from the beginning of next year. The officials also said the £3bn would come from the Treasury’s resources and would not have any repercussions on departmental budgets. The cash is likely to be directed towards implementing a clear structure for Brexit preparations. For instance: creating a Department for exiting the EU and a Department for International Trade as well as new personnel and computer systems for customs and immigration.
Thus, a consistent support to public spending will be required. This extra funding will come from the tax avoidance measures. From 2019, the government is planning to introduce a new withholding tax that will affect the royalties’ payments to the low-tax jurisdiction where payments refer to UK sales. Furthermore, further tax proposals are under scrutiny to protect the UK soil (As for instance Capital Gains Tax and CT Gains on non-residential properties) that will fiercely cope with tax evasion.
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Alessio Menna & Michele Ammirati
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