Ed Balls calls for cut in VAT to help spark growth

LABOUR has called on the government to introduce a temporary VAT cut to help spark growth in the UK and tackle inflation.

Shadow chancellor Ed Balls, making his first major speech on the economy since taking on the brief in January, said the cut was necessary to "kick start" a national economy which is showing signs of stagnating.

He seized on figures showing a surprise 1.4 per cent monthly drop in retail sales volumes, across the retail sector.

Food stores slumped more than 3 per cent over the past year, the Office for National Statistics said.

VAT was raised from 17.5 per cent to 20 per cent at the start of the year as part of Chancellor George Osborne's bid to accelerate the pace of deficit-reduction measures.

But Mr Balls called for a repeat of the temporary reduction imposed by Labour in 2008 which he said had proved very effective. "A temporary VAT cut would give the flat-lining economy the jump-start it so urgently needs," he argued.