French president Jacques Chirac has proposed slashing France's corporation tax rate from 33% to 20% in an effort to spur the country's flagging economy.

If Chirac pushes ahead with the plan, there will major implications for the UK, which could be perceived as Europe's business tax laggard.

The Daily Telegraph reports that Chirac plans to reduce corporation tax to 20% in five years.

'We have to take action on corporation tax to save our businesses and help create new ones,' Chirac said in his New Year speech.

George Osborne, the shadow chancellor, said when Labour came to power only ten of the world's richest states had lower corporation tax rates than the UK. That number has since increased to 20 and could rise to 21 if France proceeds with Chirac's plans.

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