Theresa May has ordered civil servants to draft laws allowing the UK to slash taxes
After a series of threats to “punish” the UK from Brussels leaders and warnings that Britain will have a bad deal, it is understood that Mrs May has decided to show them she is serious about using low tax to take on the flagging euro zone economy.
By ordering civil servants to draft laws the government intends to signal that britain could become a tax haven and drag big business and investments away from the EU if it plays hard ball in the negotiations.
Plans being put in place for a “no deal” situation include ready to go Budgets which would see corporation tax brought down to internationally low levels and regulations being scrapped overnight.
Leftwingers have complained that it would turn Britain into a “new western Singapore” in reference to one of the most successful economies in the world.
Far Left Labour leader Jeremy Corbyn has accused Mrs May of wanting “a bargain basement economy”.
Jeremy Corbyn has accused Mrs May of wanting 'a bargain basement economy'
However, many hope that freeing Britain from the crushing effect of Brussels red tape will allow business to grow more quickly and also see taxes fall in the UK.
"The British people are not going to lie down and say, too bad, we've been wounded
A Government source told the Sunday Telegraph: “This is a two year negotiating process. As things progress it will become increasingly apparent whether or not we are going to get an agreement.”
The source confirmed that “there are a number of tools in our armoury” which includes huge tax cuts.
And Singapore was described as “not that bad” in reference to Labour’s attack.
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Mrs May has decided to show Brussels she is serious about using low tax
The plan to take the EU on in a trade war was first flagged up last month by Chancellor Philip Hammond in an interview to the German newspaper Welt am Sonntag.
He said: "I personally hope we will be able to remain in the mainstream of European economic and social thinking. But if we are forced to be something different, then we will have to become something different.”
He added: "If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term.
Theresa May's Brexit plan
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Continued cooperation with the EU to tackle terrorism and international crime.
"In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.
"The British people are not going to lie down and say, too bad, we've been wounded. We will change our model, and we will come back, and we will be competitively engaged."
In her Lancaster House speech on her plans for Brexit, Mrs May also made it clear that the UK will slash taxes to take on the flagging euro zone economy if it was not reasonable in negotiating a deal.
Chancellor Philip Hammomd
The tough stance saw European Commissioner Jean Claude Juncker back down on “punishment” rhetoric against Britain over Brexit.
However, other leading voices including Maltese Prime Minister Joseph Muscat, who currently chairs the European Council, have said Britain must have a “worse deal” than it currently has as members of the eU amid fears that a successful Brexit will spark a collapse in the bloc with other nations leaving.