Osborne pulls out all the stops, but what will business think?

The Lib-Cons may still be getting their feet under the table but there’s been no shortage of activity since George Osborne was handed the keys to Number 11.

Just days into the job and already he is expected to announce a cut in corporation tax rates during a speech at the CBI Annual Dinner later today. Speaking at a press conference on Monday, Osborne revealed that an announcement was imminent although he refused to elaborate on his policy ahead of the statement.

A cut to the rates has been long expected after previous Tory statements that the party would slash the rate to 25% from the current level of 28%. However that raises the question of what will happen to the capital allowances regime in order to pay for the cut, another area the Tories have suggested is ripe for reform.

Meanwhile, a date for the emergency Budget has been set for 22 June, exactly six weeks, or 42 days, from the signing of the coalition agreement.

The emergency Budget will set out the fiscal path and the spending totals needed to achieve it over the coming years, underpinned by independent forecasts from the newly set up Office for Budget Responsibility.

The objective of the OBR headed up by interim chairman Sir Alan Budd is to scrutinise the public finances and its first job will be to uncover the scale of the mess left by Labour, giving Osborne and his Lib-Dem number two, David Laws, political cover to force through the biggest squeeze since the Second World War. 

Amid Osborn’s pledges to urgently “restore confidence in our economy” and calls for determination to “act quickly in the short-term in order to establish credibility for the longer term,” the question remains what does this all mean in real terms.

Among the contenders are and increase in VAT to 20%, an increase in the rate of CGT on non-business assets - possibly from the day of the Budget and an increase in the personal income tax allowance in the general direction of £10,000.

Osborne has teased us with promises of measures to boost enterprise, create a fairer tax system, and demonstrate to the world that Britain is open for business. Needless to say, the actual content of the 2010 Budget Mark Two will provide plenty of scope for speculation and interpretation among business advisers and tax specialists alike.