07/01/2009 - Darling's VAT cut 'had no effect'
A chief executive of one of the UK's leading fashion retailers has said the temporary 2.5% cut in VAT has had "no effect whatsoever" on consumer spending.
Simon Wolfson, head of Next, said that although the cut by the Government had helped restrain price increases it had done nothing to boost spending, which was its main aim.
He suggested that a better way to boost consumer confidence would have been to make income tax cuts, leaving people with more money in their pockets.
Chancellor Alistair Darling announced the 13-month VAT cut from 17.5% down to 15% in November as part of the pre-Budget report, which was designed to increase spending.
But Mr Wolfson said the £12.5 billion measure had been a "missed opportunity".
He told BBC Radio 4's Today programme: "I think if it was designed to make sure that prices don't go up in the year ahead, then it will have some effect. It will definitely have some effect in restraining price increases.
"If it was designed to boost expenditure, then it really has had no effect whatsoever."
Copyright © Press Association 2009
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