In January 2011, the UK coalition government raised the standard rate of Value Added Tax (VAT) from 17.5% to 20.0% as a key measure to reduce the structural budget deficit. This indirect tax hike immediately increased the cost of a wide range of goods and services, reducing real household disposable income. Consequently, high street retail sales volumes fell sharply in the first quarter of 2011 as consumers prioritised essential purchases. Faced with rising operating costs and declining demand, many businesses in the retail and leisure sectors put expansion plans on hold and reduced their headcount to preserve profit margins.
Using information from the extract, explain how the increase in Value Added Tax (VAT) may have affected unemployment in the UK after 2011.
