The squeeze on consumer spending has started to come through with the economy contracting by 0.2 percent in the last quarter prompting the newspapers to again begin talk of a double dip recession. My comment on this is simple, the UK is in recession and the mixed economic message is a major contributory factor. The 50 percent tax is short term gain, long term pain with those in the higher rate band having to stomach the removal of capital allowances as well this year. The UK's biggest earners are also the biggest spenders and, without a prevailing feel-good factor, money will not be spent, change hands and consequently won't provide a tax benefit to the chancellor that will in turn reduce the deficit and stimulate economic growth. The economic model in the UK works when monies are earned and spent and the more times that the same pound churns each year, the better for GB PLC. Talk of tax cuts and the increase in capital allowances are fine, but you need to include all to effect a trade-led recovery and, in this regard, the Government have missed the point spectacularly!
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