Hot on the heels of the IMF’s “endorsement” of George Osborne’s plans for the economy comes the disastrous May figures for retail sales, and Ed Balls making a speech suggesting that VAT be cut back to 17.5% to jump start sales on the high street.
Clearly, our economic waters are confusing and choppy at the moment.
Buried deep down in the original text of the IMF document (point # 9, in fact) we find:
Risks and uncertainty around this central scenario are significant. Large risks to growth and inflation arise from uncertainties surrounding euro-area sovereign turmoil, the housing market, the size of the output gap, and commodity prices. Indeed, unexpected spikes in commodity prices were a significant factor behind revisions to our 2011 inflation and growth forecasts since the 2010 Article IV consultation. Another risk is uncertainty surrounding the size of fiscal multipliers and the degree to which private demand and net exports will be vibrant enough to pick up the slack from fiscal consolidation. Uncertainties arising from key risks are further compounded by the unusually large disconnect between recent weak GDP outturns and other indicators that are stronger (e.g., rising employment, higher-than-forecast tax revenue, and stronger private sector surveys), making it all the more difficult to ascertain the economy’s near-term direction
Translation? We haven't got a fucking scooby.
My interest had been piqued by this, so I rang up the IMF Press Office. I know, I will be for it when the phone bill comes in, living off bread and scrape, sleeping in the dog kennel and no sex for a month (no change there, then) but it was worth every penny.
I wish I had recorded it.
IMF WOMAN: Media relations, how many I help you?
ME: Hi, I am a freelance writer in the UK and I was thinking of writing something about John Lipsky, following his pronouncement on the UK economy. Am I right in thinking he's now the acting managing director?
IMF WOMAN: That's right
ME: And is he getting the same salary as Mr Strauss-Kahn, I mean, given that he's going the same job?
IMF WOMAN: I don't know. Would it be possible for you to put your question in an email to ...
ME: Well, it's a simple enough question, someone must know the answer. Is there a section on the IMF web site where you publish peoples' salary scales?
IMF WOMAN: No.
ME: Is that because it's a secret?
IMF WOMAN: I don't know. If you could just send an email to...
ME: So you are saying that you either don't know or you won't tell me what the managing director of the IMF earns?
IMF WOMAN: Yes
ME: Well, I think that tells me all I need to know about your grasp of economics. Goodbye.
My reason for asking is that I suspect, from Mr Lipsky's bio on the IMF web site, that he is not short of a bob or two. Given his current directorships and his previous posts with various fund managers (hang on, weren't they the ones that caused all this...?) I reckon he's probably got the odd "portrait of Madison" in his safe. And good luck to him.
I also suspect, although, unlike Mervyn King, he hasn't been stupid enough to say that he's probably also of the opinion that unemployment in the North of England is a price worth paying etc etc chiz chiz, whatever the quotation was. If it looks like a duck, walks like a duck, and quacks like a duck, it's ... probably ... a duck.
I managed to find out, by a bit more research, what Mr Strauss-Kahn was on in 2007 when appointed. A tax free salary of $420,930 pa [source: Bloomberg Economic Weekly] plus benefits.
So, let us assume that Mr Lipsky is on the same, although if he's still working on a 2007 salary scale, I will masticate my headgear.
$420,903 pa is $8094.81 per week, which, at today's exchange rate, is £4913.55 per week. Tax free.
The current rate of Employment Support Allowance in the UK at the lowest level is £65.45 per week.
Obviously Mr Lipsky is very well-qualified to rubber-stamp Osborne’s assault on the poor and the disadvantaged.
True, there has been one glimmer of hope for the benighted fools in Westminster in the news that unemployment is apparently down. The private sector created 88,000 jobs in three months, apparently. Of course, many of these “jobs” will be part time and poorly paid, with little or nothing in the way of security or workers’ rights. And I still adhere to my previous statement that we haven’t seen the worst of it yet, simply because the effect of the Tory cuts dumping people onto the unemployment register hasn’t percolated through to the bottom line yet.
Into all this maelstrom of uncertainty blunders Ed Balls, attacking the government and insisting that the VAT increase be reversed as a matter of urgency. On the face of it, it should be good news that at least the Labour Party has rediscovered its balls (literally and metaphorically) and is making some sort of effort to attack the Tories.
However, as Ann Pettifor points out on the blog “Left Foot Forward”, by accepting that the underlying premise for the debate is simply “cuts” to “pay down the deficit”, and the only point at issue is how quickly and how deeply these should take place, Balls has in fact surrendered much of the battlefield to Cameron from the start. The whole article is worth reading, but these are the salient points:
Balls began his speech by mentioning Labour’s “emphasis on jobs and growth”, but the speech immediately morphed into Labour’s concession to the coalition, that what is needed is “a steady and balanced approach to halve the deficit in four years”. The implication being that cuts must be matched by ‘jobs and growth’. But the highlight of the speech – the soundbite that his spin doctors no doubt intended the media to emphasise – is a call for a cut in VAT “to boost consumer confidence and jump-start the economy”; Cameron flashed back his retort: “slashing taxes”, he argued, would only make the UK’s fiscal deficit worse. And so Balls is trapped: the debate now centres on whether the deficit can be financed by increasing or cutting taxes, in particular VAT. For most people, Cameron has the upper hand.
‘Of course the deficit can only be financed by increased taxes’ is the consensus. Because we have ‘spent beyond our means’, we have to raise taxes, like VAT. “Slashing” VAT – when it is higher VAT returns that are paying down the deficit – is unacceptable to the coalition, to the Treasury, to orthodox economists and to the bulk of the British public. But that’s only because most have been drilled in the propaganda: “the deficit is like a credit card”. We need to pay it down. To do so, we have to mobilise/hoard ‘savings’, i.e. higher taxes, to pay down the ‘credit card’ – but the government’s deficit is not like a credit card. And nor do we need ‘savings’ to pay it down.
The only surefire way of paying down the deficit is not by government cutting the deficit (which I and others have argued it cannot do), but by employment. Put 2.43 million people back to work, and – hey presto! – the deficit will vanish. Get 2.43 million people, including thousands of skilled and unskilled workers, clever and talented student graduates, to address Britain’s very real insecurities in energy, food and health and – hey presto – the deficit will be financed.
How? By the tax revenues that will pour into the Treasury’s coffers, either directly or indirectly – and by the savings that will be made on welfare benefits.
However, keep 2.43 million people unemployed, keep them feeling insecure, with their purses firmly shut, and you can guarantee an ever-rising government deficit (April’s deficit numbers were the highest on record for that month). And 2.43 million unemployed is sure to make British ‘confidence’ fall and the recession deepen.
I couldn’t have put it better myself.
Showing posts with label VAT. Show all posts
Showing posts with label VAT. Show all posts
Saturday, 18 June 2011
Friday, 4 February 2011
Double Dip
Eight months in to the ConDim administration, and we’re starting to see the first damaging effects of the draconian cuts as the economy plunges back into recession, albeit only by 0.5%, but I wonder what the next quarter’s figures will be. They can’t very well blame the snow next time, and if they say it’s due to the increase in VAT, then they are on a dodgy wicket, since that was their idea as well (despite having “no plans” to do it, when asked back in May).
Every time I hear the phrase “double dip” I have this mental picture of George Osborne and Vince Cable, but I guess that’s just me, eh.
So we see, today, Clegg being pressed into service (the Tories always send out an expendable, gullible Lib Dim when they have something evil or contentious or untrue to announce) to give a speech in Rotherham (oh, the irony!) about how the government does really have a plan for growth, honest, it’s just that before we can implement it, we have to slash and burn and decimate and stifle the economy, then when it’s well and truly buggered beyond all recognition, and reduced to broken glass and ashes, well, that’s the time to start thinking about recovery, obviously!
Deficit reduction by cuts is apparently a vital element of the growth plan, according to Clegg, which is a bit like saying that dousing your allotment with paraquat is a vital element in ensuring a bumper crop next year! Either the man is a complete tit or he’s totally dishonest. I suppose there’s an outside chance that he might just be both.
Meanwhile, the four horsemen of the apocalypse, Osborne, Cable, Shapps and Pickles, continue scything their way through the public sector infrastructure. 500 jobs here, 1000 there, this year, next year.
I have just one question to the people who support the coalition in its berserker attack on our society and way of life – it’s quite a simple question, and it is this:
Are you happy with the idea of unemployment, repossessions, marriage breakups? Are you happy with the idea of companies being driven to the wall? Are you happy with the idea of the public services being stripped back and cut to the bone? Do you chortle with glee at the thought of people on benefits having their money cut? Are you happy that companies are no longer able to afford to pay their employees? Are you happy, these cold winter nights, about people sleeping in doorways and under bridges? Does it fill your heart with pride and make you glad to be British?
Or like me, does it make you long for a time when it was like Ancient Rome, as portrayed in Macaulay’s Horatius:
Then none was for a party;
Then all were for the state;
Then the great man helped the poor,
And the poor man loved the great:
Then lands were fairly portioned;
Then spoils were fairly sold:
The Romans were like brothers
In the brave days of old.
Now Roman is to Roman
More hateful than a foe,
And the Tribunes beard the high,
And the Fathers grind the low.
As we wax hot in faction,
In battle we wax cold:
Wherefore men fight not as they fought
In the brave days of old.
What I want is someone to take us back to the brave days of old. “Brave” being the operative word, since they would be flying in the face of the yellow press and the vested interests of the current swarm of venal vermin who have somehow, unaccountably, (in both senses of the word) misappropriated the levers of power.
So, my Literal Dimwit chums – are you happy with what you are doing to our country by your support of Cameron and his Tory toffs? And if you are not happy, then why not vote with your feet, get out and leave them to it.
Oh - and, do you know, despite all this, despite the fact that their constituents are up against it and struggling left, right and centre, MPs are STILL whingeing about expenses. Still! They just don’t bloody get it. So you can’t claim for everything, so your paperwork gets lost by officialdom, so, it costs you money to do your job. Welcome to the real world, the one the rest of us live in, and shut the fuck up.
Every time I hear the phrase “double dip” I have this mental picture of George Osborne and Vince Cable, but I guess that’s just me, eh.
So we see, today, Clegg being pressed into service (the Tories always send out an expendable, gullible Lib Dim when they have something evil or contentious or untrue to announce) to give a speech in Rotherham (oh, the irony!) about how the government does really have a plan for growth, honest, it’s just that before we can implement it, we have to slash and burn and decimate and stifle the economy, then when it’s well and truly buggered beyond all recognition, and reduced to broken glass and ashes, well, that’s the time to start thinking about recovery, obviously!
Deficit reduction by cuts is apparently a vital element of the growth plan, according to Clegg, which is a bit like saying that dousing your allotment with paraquat is a vital element in ensuring a bumper crop next year! Either the man is a complete tit or he’s totally dishonest. I suppose there’s an outside chance that he might just be both.
Meanwhile, the four horsemen of the apocalypse, Osborne, Cable, Shapps and Pickles, continue scything their way through the public sector infrastructure. 500 jobs here, 1000 there, this year, next year.
I have just one question to the people who support the coalition in its berserker attack on our society and way of life – it’s quite a simple question, and it is this:
Are you happy with the idea of unemployment, repossessions, marriage breakups? Are you happy with the idea of companies being driven to the wall? Are you happy with the idea of the public services being stripped back and cut to the bone? Do you chortle with glee at the thought of people on benefits having their money cut? Are you happy that companies are no longer able to afford to pay their employees? Are you happy, these cold winter nights, about people sleeping in doorways and under bridges? Does it fill your heart with pride and make you glad to be British?
Or like me, does it make you long for a time when it was like Ancient Rome, as portrayed in Macaulay’s Horatius:
Then none was for a party;
Then all were for the state;
Then the great man helped the poor,
And the poor man loved the great:
Then lands were fairly portioned;
Then spoils were fairly sold:
The Romans were like brothers
In the brave days of old.
Now Roman is to Roman
More hateful than a foe,
And the Tribunes beard the high,
And the Fathers grind the low.
As we wax hot in faction,
In battle we wax cold:
Wherefore men fight not as they fought
In the brave days of old.
What I want is someone to take us back to the brave days of old. “Brave” being the operative word, since they would be flying in the face of the yellow press and the vested interests of the current swarm of venal vermin who have somehow, unaccountably, (in both senses of the word) misappropriated the levers of power.
So, my Literal Dimwit chums – are you happy with what you are doing to our country by your support of Cameron and his Tory toffs? And if you are not happy, then why not vote with your feet, get out and leave them to it.
Oh - and, do you know, despite all this, despite the fact that their constituents are up against it and struggling left, right and centre, MPs are STILL whingeing about expenses. Still! They just don’t bloody get it. So you can’t claim for everything, so your paperwork gets lost by officialdom, so, it costs you money to do your job. Welcome to the real world, the one the rest of us live in, and shut the fuck up.
Wednesday, 17 December 2008
The Last Post
No, don't get excited, I am not giving up this blog. This is about the Post Office. And I am afraid it will probably turn into a bit of a rant.
People often complain about Royal Mail. Usually the sort of predictable stuff, whipped up by tabloid journalists who complain that the post doesn't get delivered in Notting Hill until lunchtime, and lamenting the great days of the Penny Post when they could have sent a postcard to their Auntie in Tulse Hill to say that they were coming round for tea, and it would be delivered before they got there. Etc, etc.
And so, off the back of this sort of thinking, a few years ago, in some misbegotten corridor of government, was born the idea of "privatising Royal Mail".
Now, I will nail my colours to the mast here, and declare some more fundamental policies of The Bolshy Party. I believe very strongly that there are certain parts of our society that belong to us all and should be owned by, and operated for the benefit of, all British people.
These are Hospitals, Schools, Courts, Prisons, The Emergency Services, Public Transport and the Postal System. There may be others. I am in mid-rant right now.
Of course, if you are going to set up a "competitive" market in an area where there has previously been a state-owned monopoly, you would of course make sure that the process was scrupulously fair and that all concerned had a level playing field, yes?
Well, er no. Because someone must have realised, pretty early on, that if Royal Mail's competitors were to truly compete for the work, then they too would have to wind time back to 1848, invent the Penny Black, and the Railway network, and build a load of sorting offices etc etc. Oh no, that will never do. So the first indignity heaped on the Royal Mail was that they were forced to accept the idea of their "competitors" using Royal Mail staff and infrastructure for the so-called "Last Mile" delivery.
And the postal services regulator was also given the power (misguidedly again in my opinion) of stopping Royal Mail increasing its prices, so Royal Mail was forced to adopt a "price minus" model of charging these people, instead of a cost plus model. In other words, the regulator said to Royal Mail - you can't add a mark up on to what it costs and then charge your competitors that, instead you have to give them a discount off the fixed price.
So, not only was Royal Mail forced to accept unfair competition, and accommodate that competition (even to the extent of having to widen the gates of its local delivery offices to accommodate the vans owned by the competition) but it was prevented from increasing its prices to maintain its own margins.
Now, Royal Mail has not been entirely blameless in its own demise. Its management have made some dumb decisions (Elton John fronting an ad campaign, anyone?) but you have to feel sorry for them, ultimately they have been handed the shitty end of the stick. The government was of course happy to keep taking money out of Royal Mail, money that could have been invested in better sorting machinery for instance, all the time this was happening. In fact successive governments of differing hues have starved Royal Mail of investment.
So much so that in August 2006, Royal Mail took the decision to move to a system of pricing called "Pricing in Proportion" which rigged the pricing structure to price penalise "large letters" and "packets" in fact, anything that the Royal Mail could not machine-sort. Anything larger than extended C5 size. Of course, all Royal Mail's competitors followed suit. So the overall result of this particular segment of Royal Mail privatisation is already a worse service to the general public at large.
So, since January 2006, Royal Mail has been steadily losing custom in the areas of bulk mail to companies like TNT, UK Mail and DHL, while Royal Mail has still been forced to shoulder the "universal delivery obligation." In other words, with the task of delivering a letter to the remote Highlands of Scotland for 36p. Royal Mail are not stupid, and have already been making exploratory approaches to the regulator about "zonal" pricing - ie pricing more for that delivery to the Highlands than for a delivery to a town centre office, for instance. This hasn't yet come in, but if it does, this will be another way in which Royal Mail privatisation will inconvenience the public it is supposed to serve.
Then there is the question of VAT. Postage in the UK is currently VAT-exempt. But of course, once Royal Mail's monopoly is gone for good, and we have to "harmonise" with other EU countries, this may not remain the case. (As a short aside, why do we always end up harmonising with other EU countries, rather than vice versa?).
So, now we have a situation where Royal Mail has been losing money, and now needs "outside help" in the form of investors from abroad. And we can all guess who those are, can't we? TNT, UK Mail, Deutsche Post, et al.
So, let's sum up, shall we:
it's a self fulfilling prophecy. First you open the bulk mailing market to "competition" - though if it was real competition, the likes of TNT would have to wind the clock back to 1848 and invent the Penny Black and Railways and stuff, then you watch Royal Mail's revenue from bulk mailing fall while you insist (via a regulator) that they can't put their prices up AND they must still deliver to the back of beyond for 36p and you also continue to cream off cash from their pension fund (if you are the government that is)
Then, when, surprise surprise, they get financially weaker, well, the only option is to sell them off to one of their "rivals" People in the property world have been using the same principles of "benign neglect" to get rid of old troublesome and unwanted listed buildings by letting them deteriorate to the point of no return for years, now it's going to happen to the post office, courtesy of Mandleson.
Yet we can seemingly find bottomless buckets of squillions of pounds to keep the banking system in the luxury to which it has become accustomed, but we can't have a publicly owned and publicly funded socially useful postal system operated and owned for the good of all British people, no siree. The EU wouldn't like it, or something. Well, if they don't like it, they can bloody well invade, or at least they can try for nowt. I am just about ready for them today.
I hear as I am typing this that a junior government minister has resigned over the issue. Good for him, let's hope it's the first of many.
In other news of course this week we have had the wonderful Mr Madoff, who made off with all the money, and someone has discovered a black hole in the pensions calculations dating back to the 1970s which has gone undetected for three years. Oh, and the Financial Services Authority is inciting people to ring them up and tell them if they suspect financial shenanigans. Pardon me, but I sort of thought that was their job.
The more I look at the bunch of boobies who are in charge of the financial system, the more I think it should be official Bolshy Party Policy to liquidate the Hedge Funds and give all the money to hedgehogs.
People often complain about Royal Mail. Usually the sort of predictable stuff, whipped up by tabloid journalists who complain that the post doesn't get delivered in Notting Hill until lunchtime, and lamenting the great days of the Penny Post when they could have sent a postcard to their Auntie in Tulse Hill to say that they were coming round for tea, and it would be delivered before they got there. Etc, etc.
And so, off the back of this sort of thinking, a few years ago, in some misbegotten corridor of government, was born the idea of "privatising Royal Mail".
Now, I will nail my colours to the mast here, and declare some more fundamental policies of The Bolshy Party. I believe very strongly that there are certain parts of our society that belong to us all and should be owned by, and operated for the benefit of, all British people.
These are Hospitals, Schools, Courts, Prisons, The Emergency Services, Public Transport and the Postal System. There may be others. I am in mid-rant right now.
Of course, if you are going to set up a "competitive" market in an area where there has previously been a state-owned monopoly, you would of course make sure that the process was scrupulously fair and that all concerned had a level playing field, yes?
Well, er no. Because someone must have realised, pretty early on, that if Royal Mail's competitors were to truly compete for the work, then they too would have to wind time back to 1848, invent the Penny Black, and the Railway network, and build a load of sorting offices etc etc. Oh no, that will never do. So the first indignity heaped on the Royal Mail was that they were forced to accept the idea of their "competitors" using Royal Mail staff and infrastructure for the so-called "Last Mile" delivery.
And the postal services regulator was also given the power (misguidedly again in my opinion) of stopping Royal Mail increasing its prices, so Royal Mail was forced to adopt a "price minus" model of charging these people, instead of a cost plus model. In other words, the regulator said to Royal Mail - you can't add a mark up on to what it costs and then charge your competitors that, instead you have to give them a discount off the fixed price.
So, not only was Royal Mail forced to accept unfair competition, and accommodate that competition (even to the extent of having to widen the gates of its local delivery offices to accommodate the vans owned by the competition) but it was prevented from increasing its prices to maintain its own margins.
Now, Royal Mail has not been entirely blameless in its own demise. Its management have made some dumb decisions (Elton John fronting an ad campaign, anyone?) but you have to feel sorry for them, ultimately they have been handed the shitty end of the stick. The government was of course happy to keep taking money out of Royal Mail, money that could have been invested in better sorting machinery for instance, all the time this was happening. In fact successive governments of differing hues have starved Royal Mail of investment.
So much so that in August 2006, Royal Mail took the decision to move to a system of pricing called "Pricing in Proportion" which rigged the pricing structure to price penalise "large letters" and "packets" in fact, anything that the Royal Mail could not machine-sort. Anything larger than extended C5 size. Of course, all Royal Mail's competitors followed suit. So the overall result of this particular segment of Royal Mail privatisation is already a worse service to the general public at large.
So, since January 2006, Royal Mail has been steadily losing custom in the areas of bulk mail to companies like TNT, UK Mail and DHL, while Royal Mail has still been forced to shoulder the "universal delivery obligation." In other words, with the task of delivering a letter to the remote Highlands of Scotland for 36p. Royal Mail are not stupid, and have already been making exploratory approaches to the regulator about "zonal" pricing - ie pricing more for that delivery to the Highlands than for a delivery to a town centre office, for instance. This hasn't yet come in, but if it does, this will be another way in which Royal Mail privatisation will inconvenience the public it is supposed to serve.
Then there is the question of VAT. Postage in the UK is currently VAT-exempt. But of course, once Royal Mail's monopoly is gone for good, and we have to "harmonise" with other EU countries, this may not remain the case. (As a short aside, why do we always end up harmonising with other EU countries, rather than vice versa?).
So, now we have a situation where Royal Mail has been losing money, and now needs "outside help" in the form of investors from abroad. And we can all guess who those are, can't we? TNT, UK Mail, Deutsche Post, et al.
So, let's sum up, shall we:
it's a self fulfilling prophecy. First you open the bulk mailing market to "competition" - though if it was real competition, the likes of TNT would have to wind the clock back to 1848 and invent the Penny Black and Railways and stuff, then you watch Royal Mail's revenue from bulk mailing fall while you insist (via a regulator) that they can't put their prices up AND they must still deliver to the back of beyond for 36p and you also continue to cream off cash from their pension fund (if you are the government that is)
Then, when, surprise surprise, they get financially weaker, well, the only option is to sell them off to one of their "rivals" People in the property world have been using the same principles of "benign neglect" to get rid of old troublesome and unwanted listed buildings by letting them deteriorate to the point of no return for years, now it's going to happen to the post office, courtesy of Mandleson.
Yet we can seemingly find bottomless buckets of squillions of pounds to keep the banking system in the luxury to which it has become accustomed, but we can't have a publicly owned and publicly funded socially useful postal system operated and owned for the good of all British people, no siree. The EU wouldn't like it, or something. Well, if they don't like it, they can bloody well invade, or at least they can try for nowt. I am just about ready for them today.
I hear as I am typing this that a junior government minister has resigned over the issue. Good for him, let's hope it's the first of many.
In other news of course this week we have had the wonderful Mr Madoff, who made off with all the money, and someone has discovered a black hole in the pensions calculations dating back to the 1970s which has gone undetected for three years. Oh, and the Financial Services Authority is inciting people to ring them up and tell them if they suspect financial shenanigans. Pardon me, but I sort of thought that was their job.
The more I look at the bunch of boobies who are in charge of the financial system, the more I think it should be official Bolshy Party Policy to liquidate the Hedge Funds and give all the money to hedgehogs.
Sunday, 30 November 2008
VAT was the question again?
The more I think about it, the more I remain unconvinced that the cut in VAT announced by Alistair Darling will do anything to help put money into people's pockets.
I think big retailers will just quietly pocket the extra percentage and not bother to reduce prices, on the grounds that in three weeks, no one will notice. Sure, they will lose some sales because there are people who do shop around, but given that the difference is probably about £4.50 on a £250 purchase (a laser printer, for example) they know that with a gross profit margin of 30% you can put your prices up 10%, lose 25% of your customers, and still make the same gross profit, and they ain't gonna lose anything like 25%.
If you are a major office supplies organisation, mentioning no names, with an annual turnover of £114M, then keeping the prices the same and pocketing the difference is worth £2.1M pa to you, whereas individually in one-off consumer purchases, they will hardly notice they are going to be ripped off.
I suppose in a situation where big high street names are feeling the pinch - Woolworths has gone, PC World Dixons Currys are posting profit warnings, we should be grateful that the extra turnover might tip the balance and safeguard some jobs, but even there, I hae me doots.
So, tinkering round the edges and unlikely to work. Especially since the duty on fuel will be increased to compensate for the VAT cut, and the energy companies will carry on bleeding us white. At least Dick Turpin wore a mask.
I think big retailers will just quietly pocket the extra percentage and not bother to reduce prices, on the grounds that in three weeks, no one will notice. Sure, they will lose some sales because there are people who do shop around, but given that the difference is probably about £4.50 on a £250 purchase (a laser printer, for example) they know that with a gross profit margin of 30% you can put your prices up 10%, lose 25% of your customers, and still make the same gross profit, and they ain't gonna lose anything like 25%.
If you are a major office supplies organisation, mentioning no names, with an annual turnover of £114M, then keeping the prices the same and pocketing the difference is worth £2.1M pa to you, whereas individually in one-off consumer purchases, they will hardly notice they are going to be ripped off.
I suppose in a situation where big high street names are feeling the pinch - Woolworths has gone, PC World Dixons Currys are posting profit warnings, we should be grateful that the extra turnover might tip the balance and safeguard some jobs, but even there, I hae me doots.
So, tinkering round the edges and unlikely to work. Especially since the duty on fuel will be increased to compensate for the VAT cut, and the energy companies will carry on bleeding us white. At least Dick Turpin wore a mask.
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