Remember your VAT bill!

As I wrote this column last week the Bank of England's Monetary Policy Committee was mulling over what many hoped would be an economy-reviving interest rate cut.

The news that the MPC went further than expected and slashed interest rates by 1.5 per cent gave people cause for optimism.

A number of consumer-facing sectors saw shares rise sharply as investors hoped - against hope? - that any cut, be it half or one per cent, would fuel consumer confidence and get the economy's wheels grinding into action.

But not everyone I spoke to last week was so upbeat about the potential for such cuts to warm the cockles of consumers' hearts and get them spending again.

When I asked one insolvency expert what he thought the effect of even a 'largish' rate reduction would be on the man and woman in the street he replied "diddly squat".

While pubs and their owners gear up for the season of goodwill to all men - one of, if not the, most important trading periods for the sector - eyes will inevitably begin to turn to January and February. Fears of a collapse in pub trading in these two drab months are certainly mounting in some quarters.

Then the VAT demand will come, thumping onto the corporate doormat sometime around early April.

At a time when cashflow is low enough even in the good times, requests from the VAT man will be an inevitable and unwelcome form of communication for many hard-pressed operators.

Yes, businesses know it's coming, but some just don't have the cash to pay for it.

Will banks be on hand to help out with this one? I doubt it…