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UK and US relationship ‘is strong enough to deal with disputes on tax and Iran’

NIcholas Cecil
Disagreements: Business Secretary Andrea Leadsom said the UK would go ahead with the digital tax: AFP via Getty Images

A cabinet minister today sought to downplay warnings that rows over a digital tax, Iran and Huawei will hit the prospects of a post-Brexit trade deal with the United States.

Business Secretary Andrea Leadsom argued that the relationship between America and Britain was “strong” enough to deal with disagreements.

However, Washington was piling on pressure for Britain to back down over its unilateral tax on digital corporate giants, to pull out of the Iran nuclear deal and not to use equipment from Chinese technology firm Huawei in its 5G network.

US treasury secretary Steven Mnuchin raised the issue of the digital tax with Chancellor Sajid Javid at the World Economic Forum in Davos yesterday.

Sajid Javid at the World Economic Forum (AP)

But this morning Ms Leadsom gave no sign that the Government was prepared to ditch the levy due to be introduced in April, despite Donald Trump threatening retaliatory tariffs on cars.

“We are going ahead with that digital tax,” she told Sky News.

"Britain is ready to ditch its levy once an international agreement is struck, to deal with “these huge companies... making vast profits and... simply not paying their fair share of taxes,” she added.

Later, she told Talk Radio: “The US and the UK are committed to entering into a trade deal with each other and we have a very strong relationship that goes back centuries, so some of the disagreements that we might have over particular issues don’t in any way damage the excellent and strong and deep relationship.”

Washington argues that current proposed digital taxes discriminate against US firms given that so many of the tech giants are based in America including Google and Facebook, who have denied not paying their fair share of tax.

Britain is proposing a two per cent levy on revenues from UK users, which is expected to raise around £500 million a year.

US Treasury Secretary Steven Mnuchin (AFP via Getty Images)

Speaking today, Mr Mnuchin also said he was planning to raise the issue of Huawei during a meeting with Mr Javid in London at the weekend.

He described the UK Government’s timetable to achieve trade deals with both the EU and US as “aggressive” but added that Washington “expects to complete” the transatlantic deal “within this year”.

The Chancellor, addressing a CBI business lunch at the Swiss Alps gathering, said: “With the Brexit question settled, we have the chance to move forward and tackle the hard problems facing our economy — to level up and spread opportunity; to raise the potential of our country; and decarbonise our economy.”

Senior EU figures have signalled a willingness to negotiate a new trade deal with the UK but warned that talks would be complex and it would be a challenge to complete them by the end of the year.

Stefaan De Rynck, an adviser to Brussels chief Brexit negotiator Michel Barnier, called for a “dose of realism”, warning that the trade talks would be more difficult than the “divorce” deal, adding: “We are looking at seven or eight months of actual negotiation.”