Johnson Says U.K. Can Use Tax to Drive Investment Outside EU

(Bloomberg) -- Leaving the European Union is an opportunity for the U.K. to use taxes and subsidies to encourage companies to step up spending, Prime Minister Boris Johnson said.

In addition to regulatory change, “you can use tax systems and subsidies to drive investment,” he said in an interview with BBC television.

The question of state aid rules was a major hurdle for the Brexit trade negotiations. Under the terms of the deal, either side can impose tariffs on the other if it is clear that businesses are being unfairly undercut.

The U.K. is now operating outside of the bloc for the first time after the end of the transition period. Johnson has said he wants to use the U.K.’s new autonomy to boost science and “level up” the struggling economies of deprived parts of the country.

Many economists expect that more paperwork and barriers to trade will hurt economic growth just as the coronavirus pandemic hammers output.

Despite a raft of new rules for trading with the EU, Brexit is still a boon for exporters, Johnson said. “There is some bureaucracy and we’re trying to remove it,” Johnson said when asked about the red tape that took effect on Jan. 1. “We have a massive opportunity to expand our horizons, and to think globally, and to think big.”

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