One year ago the VAT rate was dropped to just 15% as a quick fix measure to stimulate the economy. However, while the countrys leaders are at loggerheads over this, the issues on the high street certainly do not reflect those being represented in parliament.
Many high street chains, whilst more than ready to lower the shop signage to include the lower VAT rate with lightning speed last year, are failing to move so quickly on the VAT change this time around. Here at MSE, we are finding, over a week later, that customers are reaching the point of sale in well known food & beverage chains, only to find themselves being charged at a higher rate due to the snails pace that signage and labels are being changed at. In addition to this, many retailers are being accused of raising prices far beyond the 2.5% rate of VAT.
However, certainly not all businesses are causing such a stir, with many high street chains offering to absorb the VAT rise. While the effect that this will have on small businesses is yet to be seen, a members survey by the federation of small businesses found that more than 70 per cent of small businesses expect the VAT rise to have a negative impact on their business.
Outside the MSE offices in the bustle of Covent Garden however, a sea of tourists and day trippers, laden with bags bearing the emblems of high street & boutique brands alike betray the reality of a debt crisis and budget deficit. Nor does last week’s VAT increase appear to have dissuaded keen shoppers.
