Boosting the British ecnonomy

Tuesday, November 25th, 2008

Yesterday, our Chancellor of the Exchequer announced a number of measures designed to lift the Britsh economy - costly in monetary terms but spread so thinly as to make little impact whilst significantly raising the National Debt. He added the promise that we shall all have to pay this debt back with higher taxation in 2o11.

Consider, his 'biggest' move in cost terms. He is going to reduce VAT (sales tax) from 17.5% to 15%. Think about it. You were thinking of buying a cheap car, say £10,000 so with VAT that's £11,750. Drop VAT to 15% and you still have to pay £11,500. Is £250 really going to change your mind? And anyway, can you get the credit to buy it?

And if the product is £100 + Vat, the saving is just £2.50.

Meanwhile, our retail stores are fighting for sales with price cuts of up to 20% so what the heck about his VAT cut. It's a useless but expensive gesture.

The root of this problem was the collapse of the banks and their savage cutback on lending. I don't know how this can be reversed but surely this should have been his priority. Maybe, a loan to good banks like mine, HSBC, on the understanding that they increased lending wisely and quickly.