What do FDs think of the ConDem coalition?

There is one point on which the coalition government has been clear. It has been busy setting policies it thinks will make the UK a more competitive place to do business. But in turn, Messrs Osborne and Cameron (and, lest we forget, their Liberal Democrat colleagues Nick Clegg and Vince Cable) expect the private sector to do the investing and pushing for a sustainable economic recovery - while they focus on erasing the £81bn fiscal hole in the country’s finances within the life of the current Parliament. Tentatively upbeat is the overriding sense finance directors say they have a year into the Conservative-Liberal Democrat government: but within that, great uncertainty keeps all on their toes.

The headline measure in March’s Budget was a two percent cut in the rate of corporation tax to 26 percent, rather than the trailed one percent, and a commitment to cut it annually by one percent to 23 percent by 2014-15. Bill Dodwell, head of tax policy at Deloitte, believes it will fall even further.

“The endgame will be 20 percent as 23 percent seems an odd figure to end up at,” he says. In the short term, Dodwell says, the cut will have a direct impact on profits and balance sheets.

Ted Baker, the fashion clothes retailer, says the impact of the extra percentage point cut will be to reduce its tax burden.

“We expect to see a future reduction in our effective rate in line with these changes,” says finance director Lindsay Page.

Moving home

More significantly, the spotlight is on companies that moved their tax residency abroad to improve the treatment of profits. Osborne’s reform of rules governing multinationals’ foreign profits saw him announce an “ultra-competitive” 5.75 percent rate on overseas financing income as part of reforms aimed at making the UK “the place international businesses go to, not the place they leave”.

Leading the potential homecoming charge is advertising giant WPP – whose chief executive Sir Martin Sorrell only took 24 hours after the Budget to say that he may well move his business back – while another Irish redomicile, United Business Media (UBM), may follow.