Only two days after urging employees, businesses and umbrella companies not to be unduly pessimistic about the recent shock announcement from the Office of National Statistics that the UK economy shrank by 0.5 per cent in Q4 last year, the Recruitment and Employment Confederation (REC) has sounded a distinctly more critical note. The Chair of REC Drivers, Rod Harris, has issued a thinly veiled admonishment to the government for having “crossed the line” in its efforts to rebalance the UK’s finances.

Conceding that a programme of spending cuts was necessary to “help the UK economy stand on its feet again,” Mr Harris nonetheless warned that there was “only so much shock the economy can absorb.” He went on to underline the triple influence of the VAT rise, increased taxation and increased fuel prices, which he believes have gone too far and are now acting to impede growth. Instead, he invited the Government to consider a reduction in the fuel duty which, he maintained “would have no implication for the money the Government earns.” It would, however, deliver a much-need helping hand to struggling small businesses in the UK by “easing their tax burden.”

A recent poll conducted by the Professional Contractors Group (PCG) found that more than half of its members, who include PAYE Umbrella contractors as well as freelancers with their own limited companies, do not believe that the recent VAT rise is a progressive policy. Prime Minister David Cameron, perhaps unexpectedly, has been bullish in his defence of the increase, claiming in a recent interview for BBC TV that it was but one part of an economic policy which is forecast to generate increased employment over the coming five years.

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