What does the weather mean for UK Plc?

Has anyone heard anything of the Civil Aviation Authority of late? What is our airport regulator doing about the continuing chaos at Heathrow Airport? The prime minister has offered BAA the army, an offer refused by BA. The CAA has long been aware that BAA (Heathrow’s operator) was in the hands of a cash strapped Spanish entity (Ferrovial) which is itself trying to flog some 10 per cent of BAA to raise funds to pay down some of its debts.

That is not to downplay the scale of the damage this unusually cold and snowy period of weather is inflicting upon UK Plc. Shops, suppliers, and eventually manufacturers, are all suffering as are service industries and wider transport systems.

Suddenly one finds oneself wondering what impact the weather will have on the wider UK economy. The Christmas rush was hoped would offset the impending VAT rise in January. How much of a rush has it now been? Indeed is this now the right moment to be raising the tax on virtually everything the hard hit commercial and service economy does?

George Osborne is back from New York having been delayed by the weather. He’s been tackling the bankers on the bonuses they are keen to pay one another. But should he perhaps now turn his attention to the timing of this VAT tax increase? Is January 4th 2011 the best date to do it or should he postpone a few months to allow recovery and better weather to prevail?

Some will query whether a mere 2.5 per cent increase in a sales tax could have such an effect. I would only suggest what I learned in my Economics A-level class – “psychology and timing are everything when it comes to management of an economy”.