Calls for a huge cut in the rate of corporation tax levied in Northern Ireland have been rejected by the government after an official report discovered it could cost the regional economy £2.2bn in revenue over 10 years.

Since devolution was restored in May local political parties and several leading business figures have called for a cut in corporation tax from 30 per cent to 12.5 per cent, which would have brought it into line with the rate in the Irish Republic. They said it would help to attract foreign investment and lift the economy.