Are growth measures achieving their aims?
27 Aug 09
A study published by PWC suggests the VAT rate cut may not have influenced shoppers’ spending behaviour
A poll of UK consumers carried out for PricewaterhouseCoopers indicates that nine out of ten of them do not believe that the cut in VAT rates has led them to spend any more money (see News, 27 September).
Some economists also doubt whether “quantitative easing”, the Bank of England’s programme of buying back gilts to inject more liquidity into the money supply, is actually leading to more lending for businesses and homebuyers – its ostensible aim – rather than simply being used to rebuild the banks’ capital.
Given that much of the massive cost of dealing with the recession comes from these two initiatives, the quantitative easing measures and the VAT rate cut, it’s a troubling thought that neither of them may be quite hitting the target when it comes to revitalising the “real” economy.