UK orders steep VAT cut to spur tourism and hospitality sector

The UK Chancellor Rishi Sunak has announced steep cuts to value added tax (VAT) worth over £4 billion in an attempt to revive the struggling British tourism and hospitality sector. In his statement to the House of Commons on Wednesday, the Chancellor said VAT will be slashed from 20% to 5% for a period of six months until January, giving every chance for the sector to bounce back.

Sunak said he wanted to see pubs, restaurants, cafes and B&Bs “bustling again”, adding that the measures were “a plan to turn our national recovery into millions of stories of personal renewal.”

Significantly, the cuts will apply to food, attractions (including zoos and cinemas) and accommodation for the next six months. The cuts will be complemented by a 50% “eat out to help out” discount on eating in restaurants and cafes which will run from Monday to Wednesday throughout August.

Addressing the Commons, Sunak said: “This has never just been a question of economics, but of values: I believe in the British people’s fortitude and endurance.”

“And it is that value, endurance, more than any other, we need to embody now,” he says. “We will not be defined by the crisis but our response to it.”

Other measures outlined include a £2 billion (€2.2 billion) youth job creation scheme, with the government looking to fund 350,000 paid six-month job placements for young people.

Sunak also announced the doubling of the number of work coaches at Job Centres across the UK in a bid to stop unemployment rising further as a consequence of the coronavirus pandemic.

The Treasury has also proposed a £1,000 (€1,100) bonus for employers for each member of staff currently furloughed – some 9.4 million across the UK – who return to work.

The government also announced a cut in stamp duty to stimulate the stagnating housing market, temporarily raising the threshold from £125,000 to £500,000 until March 31, 2021.