A tale of two VAT rates: Britain’s consumer boost

THE British government sent out a clear message to Christmas shoppers on Monday: “We want you to start spending.”

To encourage this the Labour government is cutting, VAT to 15% from 17.5% from next Monday, until the end of 2009.

The move however is expected to be a negative for Ireland as it may weaken sterling further against the euro, affecting demand for Irish exports to their biggest overseas market, and may also make it more attractive for consumers to shop across the border in the North.