IMF chief says VAT cut not enough for UK

Alistir Darling

It was ‘not a good idea’ and did not give consumers a ‘real incentive to
spend’. That’s the verdict on Alistair Darling’s cut in VAT from the chief
economist at the International Monetary Fund.

Olivier Blanchard made the comments in an interview with leading French

However, Blanchard reiterated his support for a fiscal stimulus, but
suggested it might have to be larger than previously stated at 2% of GDP.

‘If the circumstances require it, states must be ready to do more – 3% or
more if necessary. We must think about it now because it is not easy to spend
such large sums of money efficiently,’ Blanchard is quoted saying.

But he went on: ‘Temporarily cutting VAT, a measure that was adopted in Great
Britain, does not seem to me to be a good ; 2% less is not perceived by
consumers as a real incentive to spend.’

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