UK VAT rise 'good news for Irish business'

Chambers Ireland has today said that tomorrow’s Emergency Budget in the UK could bring further relief to many Irish businesses, particularly those in the border region.

The anticipated increase in the UK rate of VAT by 1.5-2.5% from 17.5% to 19-20%, coupled with the recent depreciation of the euro against sterling, provides further grounds for optimism regarding Ireland’s efforts to reduce cost differentials with respect to one of its biggest and most easily accessed markets.

Ian Talbot, Chambers Ireland Chief Executive said: "In recent months we have seen levels of retail spending begin to stabilise. In April alone, the volume of retail sales increased by 6% compared to April 2009, the first year-on-year increase since March 2008.

"A 2% VAT increase in the UK would deliver an additional £10bn to the UK Exchequer and represents a huge opportunity for the UK Government as it struggles to meets its financial outlays.

"Any anticipated increase in the UK rate of VAT will further stimulate spending in the Republic, generate revenue streams for the Exchequer, enhance footfall in Border towns and further reduce pressure on retail jobs in Ireland. Such an outcome would be very welcome at this time," Talbot concluded.