Britain’s coalition government has promised tax cuts for companies and turned to the Bank of England for help as it tries to revive the country’s stagnant economy while ploughing on with its austerity programme.

Finance minister George Osborne used his annual budget yesterday to announce he would cut the main rate of corporation tax to 20 per cent by April 2015, down from 28 per cent when the government came to power. He tweaked the Bank of England’s remit in the hope that more “monetary activism” from the bank would help spur economic recovery, but did not change the 2 per cent inflation target.

The changes clarify that policy makers can prioritise growth, provided inflation remains under control, and raise the likelihood the BoE will in future provide guidance over how long it will keep monetary policy exceptionally loose, based on growth and employment as well as inflation.