Sunak’s VAT cut is not enough to make me a happy camper

Linda J. Dodson

A £3.8bn stamp duty cut meanwhile sounds bold, but arguably is of limited impact when many such first-time buyers were exempt on purchases up to £300,000 already. We may see purchases brought forward to take advantage of the holiday by people who were already intending to move, and a resultant drop in demand next year.

But with just £1,500 in tax to be saved on the average purchase price of about £200,000, will that make a difference at the margin when consumer confidence around big ticket purchases is at record lows?

As for the furlough bonus, accountants say the £1,000 incentive will have a negligible effect on hiring and firing decisions and smacks more of a PR stunt than a strategy. A much bolder decision would have been to cut employers’ national insurance contributions and raise the employment allowance, but the Chancellor may be keeping that in the locker for an autumn Budget potentially overshadowed by a deepening jobs crisis.

Sunak has made a habit of under-promising and over-delivering – but not today. This was a Chancellor who doesn’t want to offer “false hope” to those in danger of losing their jobs. And his dark hint over the “medium-term” fixing of the public finances – a Banquo at this “eat out to help out” feast – will worry businesses and households alike.

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