SCOTTISH Chambers of Commerce has called on the UK Government to consider cutting VAT to boost consumer demand, as official figures showed that inflation grew at 2.3 per cent in March.
The Consumer Prices Index (CPI) rose above the Bank of England’s target two per cent again last month, with the Office for National Statistics noting that rising prices for food, alcohol, tobacco, clothing and footwear were among the main contributors.
Although inflation, which has risen steadily on weaker sterling since the Brexit vote, is expected to remain above the two per cent target, Scottish Chambers urged the Bank of England to resist the temptation to hike interest rates.
Chief executive Liz Cameron said a rate rise would be “premature”.
Ms Cameron said: “Scotland’s economy is contracting and growth in the UK economy is expected to slow this year. This means that a supportive business environment needs to be maintained, with the UK and Scottish Governments taking whatever action is necessary to reduce the cost burden on businesses.
“The continued weakness in sterling may be positive news for exporters but it is beginning to track through into rising costs for manufacturers and retailers and this is resulting in higher costs for consumers. It may be time for the UK Government to look again at rates of VAT, with a view to providing a boost to consumer demand at a crucial time for the economy.”
Laith Khalaf at stockbroker Hargreaves Lansdown said: “‘Inflation may be steady, but it’s still currently outpacing wages and interest rates, which spells trouble for households and cash savers. The inflationary squeeze that’s coming is going to mean consumers have to spend more at the check outs and petrol pumps.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here