More than half of Brits will cut back their spending during 2010, according to a new survey published today.
The figures, compiled by accountancy company Accountz, suggest that as many as 52 per cent of Britons plan to spend less this year than they did in 2009. Just four per cent say they will increase their spending.
The VAT increase is cited by some as a reason for reducing their spending. Almost half say they will see an obvious change to pricing as a result of the increase, and that their shopping patterns will change as a result. Around 41 per cent say they think retailers should absorb the increase.
Many retailers have chosen to do so - a large number of High Street chains have advertised a 'VAT freeze' on all relevant products. But business owners have been warned that they will still have to pay output tax at the higher rate at the end of the financial year.
Brits seem to be confused about the impact of the VAT increase. While 61 per cent think the increase will be most obvious in day-to-day grocery shopping, just 30 per cent think it will be most noticeable on technology products - which, by their nature, tend to be larger-ticket items.
The VAT increase looks set to be the first of many tax increases to hit consumers over the course of the year. Retailers are likely to see a detrimental knock-on effect from increases in National insurance Contributions and other similar rises.
