Fears 2% VAT increase will hurt economy

THE upcoming VAT hike will damage the economy and drive consumers to the North, business groups warned, as leaked documents show where the axe will fall in the budget.

A confidential report sent by the Government to the bailout troika and leaked to the German parliament also promises a “reform” of social welfare entitlements and doing away with “unemployment traps”.

The troika is seeking to have benefits cut the longer a person stays out of work and the document promises to submit a plan by the end of next month that ensures “work pays” for welfare recipients.