Darling lowers VAT

British Chancellor, Alasdair Darling (pictured), will announce a reduction in their rate of VAT tomorrow. It's not known when it will come into effect but I suspect it will be with immediate effect. The cut is expected to see the rate drop from its current level of 17.5% to 15% for at least a year - and possibly for as long as two years. That's as low as current EU law allows. He is doing this in an effort to help stimulate the economy by persuading consumers to buy again. The move will cost the British government a hefty £12.5bn a year but they see it as essential to increase consumption/demand, although it is debateable if the move will actually be effective.

From our point of view, along with a weak Sterling, and the fact that Lenihan's VAT increase in the budget (21% to 21.5%) comes into effect on 1st December, all mean this will only increase the number of shoppers from the Republic travelling down the north to Enniskillen, Newry, Strabane, Belfast, etc. for bargains in the run-up to Christmas and beyond.

By the way, if your ATM card has a 'cirrus' logo on it and you intend to shop in the North, remember to use your card up there to get your Sterling. That way, there are no bank fees - as long as you stay away from the building society atm machines.