Theresa May says Britain will seek transitional deal to soften Brexit impact

That concludes our coverage of Theresa May's appearance at the annual CBI event. You can read more in-depth coverage about the implications of the Prime Minister's speech here.

"This is a welcome announcement which outlines the beginnings of what a post-Brexit modern industrial strategy should look like," said Terry Scuoler, chief executive of EEF, the manufacturers' organisation.

"This includes a significant focus on high-value science, research and development, more intelligent use of government procurement and greater commitment to commercialise our successes."

Meanwhile, here's the Prime Minister full speech to the CBI.

The Prime Minister's suggestion that Britain could cut corporation tax has not been well received by the Labour Party.

"Theresa May's announcement that big business will be receiving yet another tax break whilst two million working people face losing £2,100 a year in universal credit cuts just shows that the Tories are still the party of the out-of-touch elite," said Rebecca Long-Bailey, the shadow chief secretary to the Treasury.

"Chancellor Philip Hammond must stand up to the prime minister and reverse planned cuts to iniversal credit and employment support allowance in Wednesday's autumn statement. Businesses need long term stability and support from government, not gimmicks.

"Only Labour will make sure the super-rich and big business elite pay their fair share to deliver the public services we need. Labour will invest across the whole country to create decent jobs and make sure no part of our country is left behind again."

Here is May's full reply in response to whether she would see a transitional deal with the EU to facilitate the Brexit process.

"Obviously as we look at the negotiation we want to get the arrangement that is going to work best for the UK and the arrangement that is going to work best for business in the UK," she said.

"And I'm conscious that there will be issues that will need to be looked at. I understand the point that Paul [Drechsler, CBI president] has made, others have made this point, that people don't want a cliff edge, they want to know with some certainty how things are going to go forward. That will be part of the work that we do in terms of the negotiation that we are undertaking with the European Union."

Meanwhile, George Palmer from Waverton Investment Management, said Wednesday's Autumn Statement is unlikely to bring drastic changes, given Britain's ongoing financial issues.

"George Osborne's Budgets and Autumn Statements were defined by a general intent to cut deficits, budgets and taxes on the entrepreneur," he said.

"If Hammond is going to stimulate an economy that is entering a period of uncertainty it is unlikely that he will be able to cut all three. He has already abandoned the prospect of balancing the books and Wednesday 23rd will give us an idea on tax cuts.

In line with Mr Trump's promises of improved infrastructure (not just walls) to provide growth and jobs, the expectation is that Mr Hammond will similarly spend the windfall of expanded deficits and unbalanced budgets on some sort of infrastructure. And arguably, there is capacity to do so – the lack of investment (excluding the Olympics) since the financial crisis means its share of GDP has been falling steeply."

The Prime Minister is now taking question. Asked whether she accepts the need for a transitional deal on Brexit, which the CBI seems to want, despite the opposition of some MPs, May says she wants what is best for the UK.

Earlier today, Frances O'Grady, the TUC general secretary, challenged May to keep her promise to put workers on company boards, after Business Secretary Greg Clark stopped short of committing to the pledge.

However, some have been left unimpressed by the words the Prime Minister has used to clarify her plans.

May has also clarified her position over plans of having workers on companies' boards.

"While it is important that the voices of workers and consumers should be represented, I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards," she says.

"Some companies may find that these models work best for them – but there are other routes that use existing Board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented. It will be a question of finding the model that works."

On the subject of corporate governance, the Prime Minister says the behaviour of a few has damaged the reputation of many.

"We all know that in recent years the reputation of business as a whole has been bruised," she says.

"Trust in business runs at just 35% among those in the lowest income brackets The behaviour of a limited few has damaged the reputation of the many. And fair or not, it is clear that something has to change.

"For when a small minority of businesses and business figures appear to game the system and work to a different set of rules, we have to recognise that the social contract between business and society fails – and the reputation of business as a whole is undermined.

"So just as government must open its mind to a new approach, so the business community must too.That is why we will shortly publish our plans to reform corporate governance, including executive pay and accountability to shareholders, and proposals to ensure the voice of employees is heard in the Boardroom."

The government must also play its part in driving innovation in the public sector, as is the case in the US, May adds.

"Government can also step up to help drive innovative procurement, particularly from small businesses – just as the United States does so effectively," she explains.

"There, strategic use of government procurement not only spurs innovation in the public sector, it gives new firms a foot in the door. In fact, many of the technologies in your smartphone, from touchscreens to voice recognition, were originally commissioned, not by Apple or Microsoft, but by the US government.

"So I can announce today that we will review our Small Business Research Initiative and look at how we can increase its impact and give more innovators their first break. And that Cambridge entrepreneur David Connell will lead the review and report back next year."

The Prime Minister explains she wants Britain's tax system to be "profoundly" in favour of innovation.

"Since 2010 we have made the Research and Development Credit more generous and easier to use – and support has risen from £1bn to almost £2.5bn a year," she says.

"Now we want to go further, and look at how we can make our support even more effective – because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also a tax system that is profoundly pro-innovation."

May confirms the government will invest an extra £2bn a year by 2020 for scientific research and will reiterate a pledge to match the lowest corporate taxes in the G20.

"In the Autumn Statement on Wednesday, we will commit to substantial real terms increases in government investment in R&D - investing an extra £2 billion a year by the end of this Parliament to help put post-Brexit Britain at the cutting edge of science and tech," she says.

"A new Industrial Strategy Challenge Fund will direct some of that investment to scientific research and the development of a number of priority technologies in particular, helping to address Britain's historic weakness on commercialisation and turning our world-leading research into long-term success.

"And we will also review the support we give innovative firms through the tax system."

May adds Britain's economy has many strengths, although she warns "we must be frank" about the UK's weaknesses if they are to be addressed.

"We are home to one of the world's financial capitals, but too frequently fast-growing firms can't get the patient long-term capital investment they require, and have to sell-out to overseas investors to access the finance they need," she says.

"We have truly world class sectors and firms, but overall business and government investment remains lower than our competitors.

"We have outstanding firms and clusters in every part of this country, but taken as a whole our economic success is still too unbalanced and focused on London and the South-East.

"We have gold-standard universities, but we are not strong enough in STEM subjects, and our technical education isn't good enough."

"And while the UK's recovery since the financial crisis has been one of the strongest in the G7, our productivity is still too low. But if we want to increase our overall prosperity, if we want more people to share in that prosperity, if we want bigger real wages for people, if we want more opportunities for young people to get on, we have to improve the productivity of our economy.

So these are the long-term, structural challenges the Industrial Strategy aims to address."

"We have already received massive votes of confidence in Britain's long-term future from some of the world's most innovative companies," the Prime Minister adds.

"Nissan's decision to build two next generation models at its plant in the North East, securing 7,000 jobs. A record £24bn investment from Softbank in Britain's future; a £500m expansion and 3,000 jobs from Jaguar Land Rover; a £200m investment from Honda, £275m from Glaxo Smith Kline; investment in a new headquarters from Apple; an estimated £1bn investment and 3,000 new jobs from Google; and this morning Facebook have announced a 50% increase in their workforce in the UK by the end of 2017.

"That is why one of my first actions as Prime Minister was to establish a new department with specific responsibility for developing a modern Industrial Strategy. A strategy that will back Britain's strategic strengths and tackle our underlying weaknesses."

May claims a strong EU is good for Britain and adds the UK can strike a deal that is "right for Britain and for the rest of Europe too." She adds the government will give clarity to business, such as a detailed deadline on Article 50 and will push to give current EU migrants citizen rights.

May says the Autumn Statement, which will be delivered on Wednesday, will include an ambitious agenda ambitious for both business and Britain. The Chancellor Philip Hammond will outline what can be done to boost the UK's long-term economic success, she adds.

The Prime Minister says Britain believes in supporting businesses. "If we support free markets, value capitalism and back business, and we do, we must do everything we can to keep faith with them," she adds.

"The Conservative Party and the government I lead will always believe in these things. If this is what we value we need to be prepared to back change."

Theresa May will shortly address the audience at the CBI conference, but her speech has already been met with criticism in some quarters.

Liberal Democrat Treasury spokesperson Susan Kramer said: "Theresa May isn't setting out a grand deal with business, she is acting out of pure desperation. It is now her official policy to compete in a race to the bottom on corporate taxes. She is panicking in response to the phone calls she gets from business telling her that in two years time major companies are leaving the U.K. because of the Government's self inflicted wound of hard Brexit.

"Trying to become the world's largest tax haven won't help keep businesses here. Instead it will simply leave ordinary people paying more and more, or seeing vital services like our NHS cut to ribbons.

"The Prime Minister doesn't have to make this choice. Instead she could be giving businesses what they really want- clarity on Brexit and a commitment to membership of the Single Market."

Meanwhile, Frances O'Grady, the TUC general secretary, has challenged Theresa May to keep her promise to put workers on company boards, after Business Secretary Greg Clark stopped short of committing to the pledge earlier today.

As expected, CBI president Paul Drechsler has called for a transition plan to ensure the Brexit process is as smooth as possible.

CBI president Paul Drechsler, is expected to say UK companies are 100% committed to making the best of Brexit, but they also want clarity from the government over its plans to split from the EU.

"The firms I speak to every day are 100% committed to making the best of Brexit," Drechsler is expected to claim. "To do this, government and business must do more than just work together.

"We must be two partners with a common cause. Two signatories to the same contract, securing the best possible result for the British people."

Business Secretary Greg Clark has stopped short of committing to Theresa May's promise to give workers a seat on company boards, instead saying "there are different ways of doing this".

"Theresa May has talked about an economy that works for everyone - that includes workers, employees, consumers, the supply chain businesses - so we will put forward a series of ways in which those voices can be represented on boards," Clark told BBC Radio 4's Today programme.

"We will publish those plans. We will have options. We are working with business.

"It is very important that the confidence that the employees in every part of the country have that very successful British business works for them is something that Theresa May and this Government takes very much to its heart and we are acting on it."

Theresa May's speech comes as Facebook is set to announce it will create 500 more jobs in the UK and that it is investing in new headquarters in Fitzrovia, central London. This follows plans last week confirmed by Google for the search engine to increase its workforce from 4,000 to 7,000 by 2020.

"The UK remains one of the best places to be a tech company and is an important part of Facebook's story," Nicola Mendelsohn, VP of Europe, Middle East and Africa at Facebook, is expected to announce at the CBI event.

"We came to London in 2007 with just a handful of people, by the end of next year we will have opened a new HQ and plan to employ 1,500 people.

"Many of those new roles will be high-skilled engineering jobs as the UK is home to our largest engineering base outside of the US."

Last week, Stephen Herring, head of taxation at the Institute of Directors (IoD), told IBTimes UK that it would be very surprising if Britain did not follow the example set by the US.

"The Labour, Coalition and Conservative governments have all focused on having a highly competitive low corporation tax headline rate because that is probably the one thing above all that foreign direct investment by multinational companies focuses on," he said.

"[The government] will look at what happens across the pond and I would be very surprised if the US rate is reduced that they wouldn't copy that rate."

Here are some more details on what the Prime Minister will say later this morning, when she will announce her intention to cut UK corporation tax to 15%.

"We believe in business, the entrepreneurs and the innovators who employ millions of people up and down this country, the basis for our prosperity," she will say.

"We will also review the support we give innovative firms through the tax system [. . .] because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation."

Her words will be seen as a reaction to a pledge by US President-elect Donald Trump who has promised to cut the federal American business tax rate from 35% to 15%.