Shortly after confirming that it is to do away with tax breaks for the UK video games industry, Chancellor George Osborne has confirmed that Value Added Tax will rise to 20 per cent from January 4th 2011.
Though there's a good chance that the ticket price of video games on the UK High Street will remain the same – much as they did when the Labour government cut VAT to 15 per cent during the recession – the drop is likely to have a damaging effect on consumer confidence as, as a result, spending.
It's also bad news for higher price goods such as consoles and 3D TVs. Nintendo, too, is unlikely to the welcome the change, coming as it will just weeks ahead of the arrival of the 3DS.
Osborne also confirmed that the coalition government will not be proceeding with the 6 per month broadband tax that had been scheduled by the last government.