Price out of market

THE news that the European Court may be about to rule that VAT is irrecoverable on legal and other professional fees for some City transactions shows how blind the Government really is to national interest when there is revenue to be raised.

Having negotiated the UK out of all the socially "cost-crippling" aspects at Maastricht in the name of national competitiveness, the Government has since 1989 pursued a ruling which will bring us out of line with our EU competitors and add 17.5 per cent to deal fee costs.

If the decision follows the Advocate General's opinion, then many corporates will look elsewhere. This will not just hit City firms, but the 200 or so foreign law firms here, which draw business to London, will also re-examine their commitment to our marketplace. The public purse may be a little richer, but the nation will be poorer.