David Jetuah, Accountancy Age, Wednesday 16 June 2010 at 09:36:00

Laurie McIlwee urges coalition to hold off raising VAT to 20% because it would dent the "fragile" economy


The FD of supermarket giant Tesco has called for the government to freeze VAT at 17.5% because the expected rise to 20% would damage the "fragile" economy.

Laurie McIlwee issued the warning as Tesco unveiled disappointing first-quarter results in a presentation to the City.

"The recovery is happening but it's fragile and therefore the

balance is important," said Laurie McIlwee, Tesco's finance director.

"VAT is going to be part of the austerity package but it is a question of when

you do it. The best thing would be to wait a bit."

However, advisers have said the increase would be an obvious revenue-raising move for a government because it would generate about 12bn of revenue.

Putting VAT on food would be "nonsensical", McIlwee added.