Moneynet states VAT increases will not affect consumer spending

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Moneynet states VAT increases will not affect consumer spending

Thu 24th Jun 2010

The increase in VAT that was announced in the emergency Budget will not have a negative impact on consumer spending, in the view of one expert.

According to Andrew Hagger, spokesperson at Moneynet, the increase of 2.5 per cent on the cost of small good will have very little impact on how much shoppers are willing to shell out.

Although he admits that the increase will be felt more on more expensive items, if they are seen as being essential consumers will still purchase them, while retailers may run promotions where the increase is not added.

However, Mr Hagger pointed out that because of the flat rate on the increase it is going to affect low earners more than the affluent.

The rise in the tax on purchases will be introduced on January 4th 2011 and will see it rise from 17.5 to 20 per cent, which the Treasury has predicted will generate an extra £13 billion each year.

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