Business News
VAT hike could weaken the economy further
The British Retail Consortium (BRC) has warned that raising VAT to 20% could have a ‘deep and long lasting’ impact on the economy.
With rumours circulating that a VAT rise could be in the pipeline, the BRC has conducted independent analysis on the possible effects of the hike and its impact on UK businesses. It warns that such an increase could cost up to 163,000 jobs over four years and reduce consumer spending by around £3.6 billion.
Whilst a VAT rise would ultimately reduce Britain’s deficit by some £11.3bn in the first year, the retail body claims that it would also lead to lower demand on the high street as prices soar and retailer’s margins are hit.
BRC Director General Stephen Robertson commented: “For the first time we have clear, independent evidence showing VAT and NI increases will have a deep and long-lasting impact on jobs and growth. The budget deficit is serious. It has to be tackled but proposals must be judged against the implications for jobs and growth.”
He added, “'Business growth will get the country out of the hole it's in, led by retail. The Government must now deliver a route to stability that supports companies and customers by avoiding damaging tax rises.”
