Consultants PricewaterhouseCoopers said 88 percent of the 2,000 consumers surveyed said the cut from 17.5 percent to 15 percent had not encouraged them to spend more on goods or services.
Respondents said the Government’s £12 billion VAT cut from last November’s pre-budget report was insignificant compared to other economic factors, adding that economic uncertainty and salary cuts influenced their spending more.
Only 8 percent of those surveyed said they spent more because of the cut, while 5 percent were unaware that there had been a cut. The cut in VAT is set to be reversed on 1 January.
Stephen Coleclough, tax partner at PwC, said:
“These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers’ spending has been unaffected by the VAT cut.
“The rest of the year will demonstrate whether the cut can still have the desired effect. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their new year sales in anticipation of a VAT increase in January.”
Source: Drapers.com
