Rachel Reeves warned UK 'woeful' on key economic issue - 'it could get worse'

The UK's tax competitiveness has been branded "woeful" amid warnings that Rachel Reeves's Budget next month could make it worse. Britain is "continuing to languish" in 32nd place out of 38 OECD countries in terms of overall tax competitiveness, ahead of only Italy and France in the G7.

This is the same overall position as last year in the International Tax Competitiveness Index by the US-based Tax Foundation. Daniel Herring, the Centre for Policy Studies' (CPS) head of economic and fiscal policy, said: "The UK's continued lack of tax competitiveness would be a concern for any Chancellor ahead of a Budget where tax hikes are widely mooted.

"Rachel Reeves should resist the urge to crank up pressure on businesses and instead learn from our international competitors. Our current tax system is already uncompetitive and anti-growth - the country cannot afford for things to get worse."

Labour's increases in capital gains tax and employers' National Insurance have seen the UK's ranking on personal taxation fall sharply, from 20th to 25th.

Meanwhile, the property tax system in the UK has been judged as the second-worst in the world because of "its high rates and bad design", the CPS said.

The think tank called for Ms Reeves to abolish stamp duty on land and shares to help lift the UK's overall rank to 31st.

Meanwhile, returning the headline corporation tax rate to 19% would improve the UK's rank for business taxation by 16 places to 12th.

A Treasury spokesman said: "The Budget will strike the right balance between making sure that we have enough money to fund our public services while ensuring we can bring growth to boost living standards.

"We have capped corporation tax and without our action, business rates relief for retail, hospitality and leisure would have ended completely in April this year. Instead, we have protected business rates bills from inflation and extended relief at 40% for 250,000 businesses."