The new year brings new challenges for the Government in 2011 in order to keep the recovery growing and avoid a double dip recession as the VAT rise bites, inflation rises and public sector jobs are cut.
At midnight last night VAT went up from 17.5% to 20%. Labour said it was the wrong tax at the wrong time. That is, it hits consumption, creates unemployment and is too early. It will be interesting to see what effect the VAT rise has on consumption and growth.
March’s Budget will be the next big macro-economic statement, I wonder if the Government will change its tack.
The big challenge for the Opposition (and new Leader Ed Miliband in particular of course) is to set out a coherent deficit reduction plan, constructively opposing the Government, whilst supporting the poor and working class.
As the Prime Minister said in his New Year message – it’s going to be a tough year with lots of headlines around public sector unemployment…. Hopefully it will be worth it and the deficit will be reduced as planned.
Chris Kelsey @ccat446