Emergency Budget: VAT to rise to 20 per cent

The emergency budget has unveiled a rise in VAT from 17.5 per cent to 20 per cent.

Around £13 billion extra will be raised from the increase.

This is the first significant change to VAT since 1991 and is to come into place on January 4 2011.

With this, the UK will be bought into line with the rest of the continent, as the United Kingdom has more exemptions to VAT than most other countries.

The standard rate is to increase from five to six per cent

VAT on items including food, children's clothing, newspapers and books will remain exempt.

Chancellor of the Exchequer George Osborne said: "The years of debt and spending made this unavoidable."