VAT rise today, the first of the Coalition moves to reduce the Government deficit hits the tape so to speak. And not a moment too soon as the Government borrowing has been over-target for sometime.
However, VAT rises are not a pretty thing and there are many people against them. No doubt there are more ways to not spend money, but the Government is in the thrall of media and special interests who defend every penny of subsidy they get.
However, the small rise in VAT does have a big effect on prices at the pump. With a fuel duty rise too, 2p has been added to the cost of a litre, or £1.20 per fill up of CU's own typical family motor. Another 3p is slated to go on in April too in Fuel Duty.
The price of fuel has been at all time highs for a couple of months now and predictions are for the price of oil to go over $100 a barrel this year, moving the price per litre up to over £1.30 easily. The petrol protests in 200 were over fuel at 80p a litre - in inflationary terms about the same a the price is now.
Of course, Gordon Brown bought off the haulage industry with tax breaks worth £2 billion a year, so the lead will have to come from elsewhere, but this is an issue that will be with us throughout 2010.