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Can we expect a reduction in UK VAT?

The Centre for Economics and Business Research has come forward with a very interesting idea to help refloat the UK economy and put money back into the pockets of consumers. The Centre is suggesting a five-point reduction in the rate of VAT in the UK bringing it down from 17.5% to 12.5% for a two-year period. This is the first time a reduction in VAT has been suggested by a serious economic party and it comes just ahead of Alistair Darling's announcement of further incentives to get the economy rolling again.

The idea of a reduction in VAT makes sense to some financial experts as it will directly impact consumers from day one. It must also be remembered that a reduction in VAT will have no downside for the UK business sector therefore offering a relatively risk-free route into the heart of the economy.

As ever Alistair Darling seems very keen to keep his ideas under wraps until he is ready to release them to the wider market. However there is immense speculation about what may or may not happen and rumours of fairly radical economic manoeuvres in the pipeline. We await the next move from Alistair Darling with anticipation.

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