M&S chief predicts VAT increase

Date: 5th November 2009

Adverse financial conditions will force ministers to increase the rate of VAT from next year, the executive chairman of Marks & Spencer has suggested.

Sir Stuart Rose also believes that the UK is "skint" due to its large public deficits, the Daily Telegraph reported.

The credit crunch and economic downturn have led to a big fall in tax revenues, leading to forecasts that the national net debt will grow by £175 billion this year alone.

Government tax takes have been further reduced by the decision to cut VAT from 17.5 to 15 per cent in order to stimulate high street sales and alleviate the worst effects of the recession on retailers.

The tax will revert to 17.5 per cent from January 1st 2010.

Sir Stuart was quoted by the newspaper as saying: "We are skint as a country and the Treasury needs revenue so I would not rule [tax increases] out."

He added: "It might be 2011 before we start seeing some [economic] growth."

The International Monetary Fund has predicted that UK GDP will contract by around four per cent in 2009.

Initial official figures for the third quarter of the year show a decline in output of 0.4 per cent.