Rishi Sunak plans VAT cut to kickstart the economy amid coronavirus carnage

Rishi Sunak looks increasingly certain today to slash VAT in a bid to kickstart the economy amid coronavirus meltdown.

Amid fears many businesses face going bust due to the fallout from lockdown, the Chancellor has ordered officials to draw up options for cutting the sales tax in the coming months. 

The move could be a boost to shops, which were forced to close for months as part of the draconian restrictions to combat the pandemic. 

Although there was a surge when non-essential retailers were allowed to reopen last Monday, trade is still running at just 40 per cent of normal levels, according to the Sunday Times. The country is facing the worst recession for 300 years with 1980s levels of unemployment.

It comes as Boris Johnson is set to unveil a new ‘one metre plus’ social distancing rule within days and give Britons the green light for holidays and haircuts.

VAT was reduced in the aftermath of the Credit Crunch, and there are growing signs that the headline rate could be lowered from the current 20 per cent to 17 per cent or even 15 per cent. 

That would cost the Treasury billions and drive up public debt even further, but give businesses more headroom to offer discounts and shore up their finances.  

The PM looks certain to halve the existing social distancing guidance – as long as other protections such as face coverings are used – in a crucial moment for the battle against the disease on Tuesday. 

The next phase of lockdown loosening from July 4 will also permit hairdressers to roll up the shutters in a boost for thousands of barbers and millions of shaggy-haired Britons in need of a trim. 

The UK holiday season will start within a fortnight when the Prime Minister gives the green light to hotels and vacation parks to reopen. 

Downing Street insists no final decision has yet been taken on restarting the £130billion-a-year domestic tourism industry, but the Mail on Sunday has been told an announcement could come along with a raft of other moves on Tuesday. 

New rules are then likely to be sent to British tourism chiefs by the end of the week.  

As the rate of infection continues to wane, scientists have rubber-stamped the reopening of salons as safe, in a change of tack cheered by the nation’s 30,000 hairdressers.

‘There’ll be a big rush to get an appointment when this is formally announced,’ a Whitehall source told the Sun, while cautioning that it will not herald a return to ‘normal’ as face coverings will be mandatory.  

The UK yesterday reported 128 new coronavirus deaths, the lowest Saturday figure since lockdown was imposed in March, bringing the total to 42,589.

The threat level was downgraded on Friday after scientists confirmed that the epidemic is shrinking by four per cent every day, and the reproduction R rate remained below one. 

As ministers’ attention turns from wrestling down the virus to rescuing the economy, they are poised to revise the two-metre rule down to ‘one-metre-plus’.

The halving permits people to keep just one metre apart as long as they take precautions such as meeting outside and with a face covering, according to the Sunday Telegraph.

Mr Johnson’s relaxation of the draconian restrictions will provide a lifeline to the beleaguered holiday industry, which will open for business also on July 4 – America’s Independence Day. 

But it is understood that while hotels and bed and breakfasts will be allowed to open then, tourist sites with shared facilities, such as campsites, will have to wait longer before being given the green light. 

The encouraging signs have fed a growing clamour from the tourism industry for a clear date from which it can start accepting bookings again – and clear guidance about how it will have to operate.

Millions of families are desperately waiting to find out whether they will be able to enjoy a summer holiday after spending three months in lockdown, while holiday bosses say that the limbo has cost them billions of pounds in lost revenue.