Will an increase in VAT kill the recovery?
As the UK government looks set to push the VAT level back to 17.5% from the reduced 15% rate there are concerns that the ongoing recovery in the UK economy could be strangled at source. There are real concerns about the financial stability of companies on the high Street and the fact that consumer spending has fluctuated enormously over the last few months with more and more consumers looking to the online arena. But will an increase in VAT effect the economic recovery?
The simple fact is that a return to the level of 17.5% VAT would effectively withdraw just short of £1 billion a month from the UK business arena and increase the cost to consumers. At a time when consumers are still struggling to find money to make ends meet its seems mad to increase VAT but then again UK national debt is estimated at over £1 trillion and rising by the day.
It is simply a case of better the devil you know with an increase in VAT less likely to attract the same hostility as the introduction of a new tax would or indeed a short-term increase in income tax rates. Many UK consumers will already be expecting VAT to rise to former levels although there are significant concerns within the business arena that some companies will struggle to survive. When you also consider that UK banks are still loath to lend money to many UK retailers the situation could get very much worse on the high street.
Share this..
Related stories
Is Inflation Set To Motor Higher?
As the threat of widespread industrial action in the UK moves ever closer there are real fears that even a concerted effort by the Bank of England will not be enough to curb the growing threat of inflation. The rate is forecast to rise to 4% this year and that was before the raft of strike actions announced by unions across the UK. The recent fuel delivery strike saw an inflation busting 14% pay...
Read MoreIs New Labour now dead?
While Tony Blair dragged the Labour Party kicking and screaming into the 21st century it seems that, if the leaked Treasury documents are anything to go by, that we are lurching towards a 1970s style public sector spending crackdown. The Institute for Fiscal Studies, an association which is often quoted by Gordon Brown, has today come out in support of the Conservative party's view of the UK econo...
Read MoreEmployment protest in Wales could be the first of many
Around 100 unemployed construction workers are today protesting outside the Uskmouth power station in South Wales where there is a dispute about the number of local staff working on the project. Siemens, which is in charge of the project, claims that a promise to employ a minimum of 80% of the workforce from the local community has been upheld with 81.5% either British or Irish. However, this com...
Read MoreEU approves changes at Lloyds bank
The European Union Commission has today approved the UK government state aid invested into Lloyds bank which will be rubberstamped in exchange for an agreement that 600 Lloyds branches will be sold off. This now leaves the way open for the £21.5 billion refinancing which Lloyds bank announced some days ago and which had been subject to speculation regarding potential EU approval. So what next?
Is Greece the only country struggling with national debt?
Last week's announcement that the Greek government was struggling to repay the country's national debt has had an impact upon worldwide money markets and has seen more and more people investigating other national debt situations. The problem for the Greek government is the weak economy which has seen national debt grow and the budget deficit balloon out of control. The actual budget deficit in...
Read More