VAT rise would cut consumer spending, says BRC

Date: 28th May 2010

The British Retail Consortium (BRC) has voiced its concerns about what the knock-on effect of an increase in VAT could be.

According to the firm, increasing VAT by 2.5 per cent to 20 per cent will reduce consumer spending by £3.6 billion over the next four years.

The figures come from an independent analysis carried out for the BRC, which explored the economic impact of a range of possible VAT increases.

According to the report, a rise to 20 per cent would also lead to the loss of 163,000 jobs by 2014.

BRC director general Stephen Robertson said: "For the first time we have clear, independent evidence showing VAT and National Insurance increases will have a deep and long-lasting impact on jobs and growth.

"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."

Posted by Jacob Williams