UK government unlikely to extend VAT holiday
The VAT holiday which many people believe has assisted the UK retail sector will end on 31 December 2009 - ending hopes of an extension next year. The move was effectively confirmed with today's government budget figures which showed that £8 billion was borrowed in July, a month which is historically very strong on the tax receipt front. The UK government has already confirmed that the budget deficit will be around £175 billion in the current year although after today's figure many people believe this could be far higher.
At a time when many believe the UK economy is starting to move forward, the sudden demise in the government budget is a body blow and one which is sure to catch the headlines in the financial press over the next few days. Despite the investment of hundreds of billions of pounds of UK taxpayer's money into the banking system the government is still adamant that investment into the public sector must continue at pace. Surely it is only matter of time before Gordon Brown bites the bullet and confirms that public sector investment will fall for the next few years at least?
The Conservative party have grabbed the headlines somewhat by confirming they will reduce public sector investment in some areas.
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