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Retail sales down, but is VAT cut a feasible 'plan B'? Friday, 17th June 2011
Labour Shadow Chancellor Ed Ball’s proposed VAT cut came under fire last night, after a decline in retail spending sent shockwaves through the Cabinet.
Ed Balls stated a temporary reversal of this year’s increase in sales tax would stimulate consumer confidence, counter inflation and help create jobs. But Prime Minister David Cameron and Nick Clegg accused the proposal of an unfunded tax cut as “daft”, suggesting Ball’s “plan B” must stand for “bankrupt.”
Speaking for the first time on the economy since taking on the brief in January, Balls used the 1.4 percent monthly drop in sales volume across the retail sector to add weight to his argument to end the “political gamble” of severe austerity measures.
According to the Office for National Statistics food stores slumped more than 3 percent over the last year as VAT was raised from 17.5 percent to 20 percent.