Date: Tuesday 04 Jan 2011
LONDON (ShareCast) - Middle-class households will have to pay nearly £600 in extra taxes this year after today’s 2.5% rise in VAT, according to new research carried out for The Times. The coalition’s decision to raise VAT from 17.5% to 20% to tackle the deficit prompted a political row yesterday, with George Osborne and Ed Miliband trading insults over their economic plans.
The cost of many goods and services will rise by more than three times the rate of the VAT increase as businesses use the tax to mask a more dramatic price review, leading industry experts warn today. The rate of Value Added Tax rose by 2.5 percentage points at midnight, from 17.5% to 20%. But analysts believe many gyms, mobile phone companies, restaurants and shops will raise their prices by between 5% and 8%, or possibly more. To recoup the escalating cost of petrol, energy, cotton and other key commodities, they are expected to use the tax change to obscure far larger price increases, the Telegraph reports.
Britain’s deficit-reduction programme will remain on track this year because tax rises and spending cuts will not stunt growth enough to cause a double-dip recession, according to a large majority of economists polled by the Financial Times. In an extensive survey of leading economists, most concluded that the austerity measures, including today’s rise in the rate of value added tax to 20%, were a big gamble, but one that was likely to pay off. Their biggest concerns were over Britain’s stubbornly high inflation and the risk of an intensifying eurozone sovereign debt crisis imperilling economic recovery.
Facebook has raised $500m from Goldman Sachs and a Russian investment firm amid increasing pressure on its founder to take the company public. The social networking site has refused to comment on reports that Goldman Sachs has invested $450m and Digital Sky Technologies $50m in a deal thought to value the business at $50bn (£32bn), the Times reports.
The new business year began with a flurry of economic optimism yesterday as closely-watched surveys of industrial activity from Europe and the US showed buoyant growth. In Europe, the manufacturing purchasing managers' index (PMI) showed that factory activity across the crisis-hit eurozone improved for a third consecutive month in December, thanks to a surge in new orders and rapid hiring of new staff. In the US, factory output expanded as its quickest rate for seven months as consumer and corporate spending began to take over from the initial boost of inventory rebuilding, the Independent reports.
Media Corporation, a London-based online casino and advertising group, has put www.gambling.com on the block and expects the name to fetch more than $10m (£6.4m).Justin Drummond, its chief executive, asked Sedo to broker a sale of the domain name last month after a couple of potential buyers indicated they would be prepared to pay about $6m for gambling.com, the Times reports.
A report published today shows that confidence among chief financial officers at some of the country’s biggest businesses rose sharply in the final three months of last year. At the same time, their appetite for risk jumped to the highest level since before the credit crunch began in earnest. The findings in a report by Deloitte will boost hopes that the private sector might be able to compensate for deep public sector cuts this year, the Times reports.
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