Jeremy Hunt dismisses corporation tax calls despite construction sector boost

Jeremy Hunt received a pre-Budget boost today as the construction industry returned to growth for the first time in three months.

The closely watched PMI survey showed the highest rating since May last year, in the latest sign of resilience in the economy.

However, the Chancellor has again rejected calls to cancel the planned £18bn corporate tax increase.

Despite a plea from billionaire entrepreneur James Dyson to stop stunting growth, Hunt’s allies insisted that if the 19 percent to 25 percent increase falls through, other tax increases or public service cuts would be needed.

Chancellor Jeremy Hunt has again rejected calls to cancel planned £18bn corporate tax increase

They insisted only the largest third of companies will pay the higher rate, and it is ‘right’ for them to contribute ‘a little more’ after the government borrowed £400bn to keep the economy going during Covid.

In a letter to Rishi Sunak seen by the Sun, Sir James warned that high tax rates made investment in the UK impossible.

“Is it any wonder that the economy is teetering on a recession, or that companies like AstraZeneca decide to take their investment elsewhere?” He wrote.

Mr Hunt has been given an estimated £30bn budget for his budget on March 15, thanks to low-than-expected borrowing.

He is expected to use the one-time cash to drop plans to raise the cap on average household energy bills from £2,500 to £3,000 next month.

However, the outlook for growth will be crucial to balance the books as they determine government revenues and expenditures year after year.

GDP figures and inflation are slightly better than expected.

New figures showed that activity in the construction sector grew the fastest in nine months.

The S&P Global/CIPS construction PMI scored 54.6 last month, compared to 48.4 in January.

Any score below 50 is considered a decline, while anything above that is considered growth.

It was well above analysts’ expectations, with an economist consensus compiled by Pantheon Macroeconomics still predicting monthly declines.

In a letter to Rishi Sunak, Sir James Dyson (pictured) warned that high tax rates made investment in the UK impossible

Tim Moore, economics director at S&P Global Market Intelligence, said: “Business activity in the UK construction sector picked up again in February as a pick-up in commercial work and civil engineering production helped to offset weakness in the housing market.

“Some firms noted that receding recession fears and improving global economic prospects had boosted customer confidence in the commercial segment.”

The report indicated that work on major infrastructure projects such as HS2 this month contributed to improved civil engineering activities.

Civil engineering returned to growth with a score of 52.3, while commercial construction was the strongest part of the sector with a score of 55.3 in February.

Nevertheless, activity in the housing sector fell for the third month in a row.

Residential construction saw the downturn ease somewhat with a reading of 47.4, with companies highlighting “weak market conditions due to elevated interest rates.”