I do not make any claims to be an expert in economics and in fact I find most talk of it boring as I have no interest in fiscal matters no matter how much it may affect my own pocket. However, even I can see that George Osborne is clutching desperately at straws to claim today's rise in VAT from 17.5% to 20% will help increase employment.
http://www.bbc.co.uk/news/business-12110945

For all the pros and (more) cons of this policy his logic that  "it would "increase employment" because it would increase confidence that the government was tackling the budget deficit" just does not add up. Even if business leaders felt that they are now confident that the deficit was being controlled that does not then necessarily mean that they are going to start employing people. As it is most small businesses are using the recession to rationalize and save costs by reducing the workforce and freezing pay. This means that households have less money and with the VAT hike are less likely to buy anything other than essential. This could therefore see smaller retailers having to let staff go as their profits diminish creating a vicious circle. Rather than increasing the revenue gained from VAT if fewer purchases are made any increase from the higher rate may be negated by less items being sold. Such rates are always going to be a balancing act and economists better qualified than I will have differing views on the matter but the increased employment claim is fanciful but then the truth that "we're trying to raise some money and I thought I'd give this a go to see if it works" probably wouldn't play to well.