If ever there was proof the austerity and raising taxes which is being enforced on the Irish doesn’t work, it’s the fact that Ireland is about to raise VAT by 2% and everyone is lining up to go shopping in Northern Ireland instead. The people in the Republic of Ireland regularly take advantage of exchange rates and VAT increases to go shopping across the border. When the economy is on the ropes, does it make sense to raise VAT when you can predict there will be a flood of money going straight to Newry and Enniskillen in Northern Ireland.

Its predictable the result especially when the VAT gap between Ireland and the UK will now be 3%.  As reported in the Independent today business groups are very unhappy of the damage this will do to the economy.

  A business group that represents the retail sector said the planned VAT increase was a further blow to shopkeepers in addition to the collapse in consumer spending. ‘Worst’ Retail Ireland chairman Frank Gleeson said it would undermine the domestic recovery. “The run-up to the busy Christmas trading period is the worst possible time of year to make these announcements,” he added.

Of course Ireland being a vassal state is no longer in control of its own affairs takes its orders from the IMF and must get approval for its budget from the Germans.

The document outlining the VAT hike was an update on the bailout sent by the Government to the European Commission. From there it was passed to each of the EU governments. The German finance ministry gave it to the lower house of the Bundestag because all bailout payments have to be signed off on by the parliament.

So the bankers and technocrats run Greece and Italy and the Germans have the final say on the Irish budgets. All to keep the show on the road, to asset strip countries, to extend our working lives through increased pension ages. Let the banks fall and run its course.