Monday, 24 November 2008

First day with the heating on

Woke up to black skies,temperatures of 6 degrees, and a piercing northerly wind. The storms that have ravaged the north are now making their way down over the Alps to us. Even the boyz are perturbed by the change in the weather - this morning rather than rush out of the house they chose to sit in the hallway eyeing the open door with one of those ' who do you think you're kidding ' looks.

The more I look at this planned reduction in VAT to 15% , the less I understand it. My inbox is bombarded every day with special offers and 20% discount promotions by retailers. British Airways is offering 'airmiles' flights at 50% off their posted rates and the London hotel I'm staying at is 30% cheaper than it was at this time last year. If everyone is slashing prices by 10%, 20% or more what difference to spending patterns will an extra 2.5% off VAT make ? Surely all the government is doing is paying for some of the discounting that was going to occur anyway. The proposed increase in top rate tax to 45% may also be politically equitable but it's not going to raise very much more than £1.4 billion - a sum that barely makes a dent in the increased borrowing. Surely, there must be a more efficient way of stimulating the economy that doesn't mortgage away the future? If this downturn lasts much more than 12 months the banks will need another helping hand and the governments capacity to borrow will be severely stretched.

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