EU economic affairs commissioner Pierre Moscovici said on Tuesday Britain’s plan to cut corporation tax to less than 15 per cent was a bad idea and he doubted it would take place.

UK chancellor of the exchequer George Osborne announced the cut on Monday in an attempt to cushion the shock of Britain’s vote to leave the European Union.

“Dropping to 15 per cent doesn’t look to me like a good initiative to be getting involved in ... , and that would be a considerable loss of receipts for the British Treasury at a time when there is already a deficit that is much too high in Britain,” Mr Moscovici said. He said the move would also amount to fiscal dumping.

“So yes, at this point it doesn’t seem to me like the right plan, and I don’t think it will be George Osborne who goes ahead with it ... Let’s be watchful but let’s not be excessively worried.”

Mr Osborne gave no target date for the cut. He had previously said he would cut corporation tax to 17 percent by 2020 from 20 per cent now. The average rate among the world’s most developed countries is 25 per cent.

Britain is due to have a new prime minister and government by September, once members of the ruling Conservative party have elected a new leader to succeed David Cameron.

- Reuters