The shadow minister for tourism, Labour’s Gloria De Piero, has lashed out at the government’s decision to hike VAT from 17.5 per cent to 20 per cent. She claimed that the increase will have a detrimental effect on the country’s tourism industry pointing out that those visiting the UK played a vital role in the economy.

She added that the government should be encouraging visitors, not persuading them to stay away by making Britain more expensive. In some countries in Europe, including Germany and France, the VAT on restaurant meals and hotel rooms is reduced in order to attract customers from abroad.

Unfortunately, tourists coming to the UK will have to cope with the full force of the rise in VAT which was enforced at midnight. Some accountants are also warning that tax rises will mean many families in the country will have to think hard about whether they can financially justify a holiday this year.

Deloitte’s head of tax, Bill Dodwell, said it would be families on higher than average incomes, many of which will have to find an extra £600 per year to cope with the tax increases, which will be hardest hit. He added that it is likely that many will decide to find the cash in the funds usually put aside for the family holiday.

The government is hoping that events in the UK such as the wedding of Prince William to Kate Middleton, the celebration of the Queen’s diamond jubilee and the 2012 Olympic Games will encourage people to visit.