by Jason Moore

London Mayor Boris Johson may have been talking sense when he called on the British government to cut taxes in an effort to get the British economy moving again. The Spanish government should do the same. I suspect that the only way that Britain and Spain will finally leave the recession is if consumers start spending again. Consumer spending is the driving force behind the British and Spanish economies. In Spain the government seems on a mission to hit the spending power of those in employment. Taxes have risen and the rate of Value Added Tax is set to rise on September 1. Now, I know that the Spanish government is desperate for funds but raising taxes is not the way. Infact I suspect that the government will raise less money through the VAT hike because consumers will simply spend less. Now, if VAT was reduced then consumer spending would rise and inturn the government would receive a greater income. In Spain there is no light at the end of the tunnel for the Spanish economy. The government will probably have to ask for another bailout sooner rather than later from the European Union as Spain struggles to pay its massive debt. Spain is no longer a cheap place to live. Even tourists are complaining about the high cost of living which is set to rise even further from September. Perhaps a new radical alternative is needed. Consumers are never going to spend more if they have less money in their pockets.

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