Single-lever policy simulation · taxation
VAT rate change
This report models the effect of raising VAT from 0pp (20% standard rate) to +3pp (≈+£24bn/yr) — with every other government policy left unchanged — on the public finances and the economy, projected over 10 years.
Improves Fiscal pressure, GDP strength and NHS staffing, with little downside in the model.
A single lever moved in isolation — which no real government does. Figures are modelled projections, not predictions. How the model works →
Direct effects
▼GDP strength
mild improvementWhy: VAT changes affect consumer spending across the whole economy
▼Public satisfaction
negligible net effectWhy: VAT is regressive — increases hit low-income households hardest
↯ Why some effects pull against the headline
- The direct effect on GDP strength points one way, but knock-on effects outweigh it — the net 10-year result is an improvement. This tension is the point, not a glitch.
Knock-on effects
Reached indirectly, as the direct effects propagate through the system. Ordering reflects how the effect spreads, not a literal sequence in time.
Model output — exact figures
Index points on a 0–100 scale. Lower is better for pressure metrics; higher is better for outcomes like GDP and satisfaction.