VAT rise 'won't be too bad'

Date: 9th October 2009

The end of the temporary VAT cut could prove to be good news, rather than bad news, for the nation's retailers.

Financial experts suggest that smart marketing and discounting could counterbalance the negative effects of the upcoming change, Reuters reported.

The VAT reduction, which takes the sales tax down from 17.5 per cent to 15 per cent, was introduced by the government last November.

It is scheduled to end on January 1st 2010.

Speaking to the news agency, Richard Lowe, head of retail and wholesale banking at Barclays, said that the end of the reduction represented an opportunity for marketers to "come to the fore".

He added: "Retail is all about theatre and creating events and there is an opportunity to create an event around the VAT issue."

Also commenting on the issue, Stephen Coleclough at PricewaterhouseCoopers said that strategies for the period between Christmas and New Year would prove crucial to retailers who might otherwise see businesses damaged by the end of the VAT cut.

"What we suspect might happen is that you get a combination of post Christmas sales or even Christmas sales starting early," he said.