Vince Cable MP addresses business leaders at Michelmores event
Cable warns of tax hikes and economic pain
Liberal Democrat Treasury spokesman Vince Cable has warned of tax rises - including a 25 per cent rate of VAT - in an address to a group of Westcountry solicitors and business leaders in London.
Dr Cable said taxes would rise regardless of the result of the General Election next year, adding that although all three major parties were now open about the need for public sector spending cuts, none had yet stated that taxes would need to rise to address the UK's growing deficit.
Speaking at a lunch organised by Exeter-based Michelmores Solicitors, Dr Cable addressed an audience of partners and business leaders at Painters Hall, in the City, on Tuesday.
Dr Cable is the latest in a series of high-profile speakers to attend the Michelmores event - previous speakers have included Lord Cecil Parkinson and MP John Redwood, chairman of the Economic Competitiveness Policy Group.
He began by outlining the scale of the problem faced by the UK's economy in the last year, saying it was the economic equivalent of "a big heart attack".
"It was not just the UK, it was America as well, but the UK was particularly hit because it had exceptional levels of personal debt - more than any other western country. Britain was relatively badly affected," he said.
"Where we are at the moment, the patient has been saved because the clinicians did the right things very quickly. We had low interest rates and quantitative easing, which was a messy process, but it has kept the patient alive, albeit connected to life support systems."
With the economy likely to dominate campaigning for next year's General Election, Dr Cable predicted a difficult immediate future for UK plc, with further rises in unemployment.
The construction sector and any company with a large-scale contract with the Government was likely to be affected by the forthcoming spending cuts, he said, predicting that defence contractors could be hit particularly badly.
"The US deficit will close itself when the economy recovers, whereas the British deficit is structural. It comes from the City and the housing market. This Government and the next government are going to have to get rid of a deficit of something like 8 per cent of GDP over five years. It's a massive undertaking," he said.
Public sector spending cuts would not, on their own, be enough to reduce the deficit, he said, predicting imminent tax rises.
"Not one of the three main parties is talking about increasing tax but I have no doubt that in the next budget, or the one after, taxes will go up," he said. "My prediction is that there will be high value added tax and that rates will go up to 20, 22 or 25 per cent."
For further information, contact Jeff Nicholls, Marketing Manager, at jeff.nicholls@michelmores.com.
(This report appeared in the Western Morning News)
( Last Updated: 01-12-2009 )
