The Chancellor is right to use public spending cuts as the main means for addressing the deficit but the VAT increase is disappointing, according to the British Retail Consortium (BRC).
Reacting to the Budget, the BRC said it was relieved that the range of items subject to VAT won’t be expanded, but increasing the VAT rate will hit jobs, consumer spending and economic growth.
However the retailers’ organisation accepts the Chancellor has tough choices to make. With retailers now clear that they face a 20% VAT rise from 4 January, the approach to implementation is their key concern.
In response to the VAT increase, BRC director general, Stephen Robertson, said: “We didn’t want a VAT increase. It will hit jobs, consumer spending, the pace of recovery and add to inflation, but we accept the Government has no easy options.”
On public spending cuts, Robertson said: “The Government is right to prioritise substantial cuts in public spending over tax rises. It has to cut spending which cannot be fully justified and get more from every pound it raises.
“The Chancellor is right that private sector businesses are the engine that will drive growth. To restore the public finances to health the Government must deliver an environment that encourages private sector investment. Tax increases do the opposite.”
Source: British Retail Consortium (BRC)
