Ireland's enterprise, trade and innovation minister has predicted that new jobs will be created as a result of the UK government's decision to raise value added tax (VAT).

Batt O'Keeffe pointed to the potential for the policy to stimulate the Irish economy by boosting spending in the country, particularly as the euro has fallen in value against the pound in recent weeks.

"The move will increase consumer demand and generate retail sales at a time when we need every possible support to create jobs and build for economic recovery," he declared.

According to the politician, cross-border purchases will grow as a result of the move by the coalition government in Britain and it is also likely to have a positive impact on exports.

The increase in the rate of VAT charged on goods in the UK from 17.5 per cent to 20 per cent was announced by chancellor George Osborne as part of his emergency Budget on June 22nd.

Posted by Kate Griffin