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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

26 Nov 2008

The plan revealed

Following on from plans to bail out banks and borrow up to the hilt (well possibly 50% of GDP anyway...) we now know that from 1st December there will be a drop in VAT to 15%.
On the surface, this is to stimulate economic activity but the reality is that this will make little difference apart from a small impact on Christmas shopping. For those who are already feeling the pinch, they are struggling with their fuel bills and food shopping, clothes for the kids... Will any of these things become cheaper? Yes - junk food, sweets, biscuits cakes.... genius!
Any essentials such as wholesome foods and children's clothing are already tax-exempt - electricity and gas are only taxed at 5%. What items from the shopping basket have rocketed in the last year? Fuel costs and food in the supermarket...
How long will this measure last? 13 months - right up to the next election by any chance?? and then what? Already there are denials that there is a proposal to hike VAT up to 18% after an election. So how on earth will they fund the shortfall in taxes raised? There is talk of taxing the super-earners in 2011 (once again after the election), but these people have been so far forewarned that they have plenty of time to cook the books before this tax kicks in. The clever accountants will have already formulated a strategy to make sure that this tax raises next to nothing.
What conclusions can we draw?
Simply that these measures are politically-motivated at a time when we really need politicians to forget their differences and genuinely try to help the country (and the world for that matter) out of an economic mess. What we need is a leader who can cut through the dross of political jousting and get to the heart of the matter - sadly I know of no-one with the qualifications for the job. I have always been one to wholeheartedly believe that no-one who craves leadership should actually be given a position of power. Unfortunately we have a system that dictates that whoever wants it the most and is prepared to sell everyone down the river to get it, will be our Prime Minister.

Related posts:
Is there really a credit crunch?
Is this a recession?
How to survive recession
Gordon Brown rescue plan

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