The decision to increase VAT from 17.5 per cent to 20 per cent could result in job losses, experts have warned.

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People looking for recruitment agency invoice financing may be concerned to hear that chancellor George Osborne's decision to increase VAT from 17.5 per cent to 20 per cent could result in job losses.

That is according to HR recruiter Ortus, which warned that the move announced in the emergency Budget this week is likely to cost around 200,000 to 235,000 UK jobs over the next eight to 10 years.

Stephen Menko, UK Director of Ortus, said: "At least George Osborne stopped at 20 per cent. The EU allows members to increase VAT all the way up to 25 per cent."

The company's conclusion is based on what happened in the Netherlands where a one per cent increase in VAT resulted in a loss of 20,000 jobs. The UK number of job losses is higher because it has a significantly larger workforce.

And, with public sector job cuts expected to hit 725,000 jobs, experts are warning that UK unemployment could exceed the three million mark.