Member Article

VAT reduction has had ?little impact?

The reduction in the rate of VAT from 17.5% to 15% late last year has had little or no impact on consumer spending in the North East according to research commissioned by PricewaterhouseCoopers LLP.

In a recent survey of over 2,000 consumers, 86% of those polled said that the VAT change had not made them increase their spending on goods and services over the last few months, and that the VAT change was insignificant compared to other factors such as reduction in income or uncertainty about the economic situation.

Only 7% said they had spent more as a result of the reduction, with 2% spending a little more and 5% spending a lot more. The remaining 7% of those asked were not aware of any VAT change.

Jane Moses, VAT, PricewaterhouseCoopers LLP, Newcastle said: “These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers’ spending in the North East 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.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .