George Osborne attacks Alistair Darlings Pre-budget report package and calls for “radical monetary action” urging the government to intervene directly in the banking system to make banks lend more and to cut the base interest rate further.

Mr Osborne insisted that there is room to cut rates further, stating that in the US the interest rate is at 1 percent indicating we can cut from the 3 percent base rate we have at the moment.

The Shadow chancellor also made reference to the US Federal Reserve now lending directly to businesses and cutting out the banks, saying that this is an action the UK government could take.

The UK Chancellor Alistair Darling unveiled plans on Monday at his Pre-Budget Speech that the government will be borrowing as much as £118 billion in a single year – this move will see the national debt being pushed up to £1 trillion. He also added that he will be increasing national insurance contributions to raise some of the £20 billion he is borrowing so he can make tax cuts, which he has put in place to help the UK out of recession.

Source: Telegraph

With Consumers already taking advantage of struggling retailers slashing 20 to 30 percent of all their goods to encourage spending, the 2.5 percent extra discount consumers will receive by the Chancellor cutting VAT down from 17.5 percent to 15 percent will make little or no difference at all.

The cut in VAT is highly unlikely to get consumers spending again although the Chancellor said that it was a move to increase consumer spending. However it is also unlikely that consumers will be rushing to stock up on their Christmas beverages due to the Chancellor increasing the tax in alcohol duty to part pay for the cut in VAT, it has been noted that the pre-budget is a budget where the government give with one hand and take away with the other.

Retailers have said that the VAT cut will make no difference at all, and in-fact businesses will have to spend more money on re-advertising and changing pricing systems. Experts have also warned that the VAT cut may not even be seen by the consumer due to the huge cuts the retailers are already making.

Source: thisismoney