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VAT: Cumbria

Volume 487: debated on Tuesday 10 February 2009

To ask the Chancellor of the Exchequer what assessment his Department has made of the effect on consumer spending in (a) Cumbria and (b) Copeland constituencies of the reduction in the rate of value added tax to 15 per cent. (255037)

The economic forecast made in the pre-Budget report, based on realistic assumptions, assumed that, over time, the majority of the reduction in VAT will be passed on to consumers through lower prices, and that households will spend around half of the increase in real disposable income that results. Overall, GDP growth in 2009 is forecast to be around half a percentage point higher than it would be in the absence of the discretionary action that the Government have taken. A regional breakdown has not been made.

To ask the Chancellor of the Exchequer what assessment his Department has made of the effect on the Cumbrian economy of the reduction in the rate of value added tax to 15 per cent. (255038)

The economic forecast made in the pre-Budget report, based on realistic assumptions, assumed that, over time, the majority of the reduction in VAT will be passed on to consumers through lower prices, and that households will spend around half of the increase in real disposable income that results. Overall, GDP growth in 2009 is forecast to be around half a percentage point higher than it would be in the absence of the discretionary action that the Government have taken. A separate assessment of the effect on the Cumbrian economy has not been made.