‘Consumer spending cools over Christmas’
Wednesday November 18, 2009
Consumers in the UK are planning to cut down their spending this holiday season in the lead up to the VAT rate hike, new projections show.
The Telegraph reports that one in three shoppers expect to trim their Christmas spending this year as they prepare for higher prices when the rate of VAT is increased back up to 17.5 per cent.
Some of the areas that will be worst hit are furniture and electricals, as shoppers attempt to avoid spending money on non-essential items. However, clothing, health and beauty products will fare much better.
Overall, the non-food sector is expected to lose out on around £1.3 billion during the fourth quarter due to declining sales.
Retail market research company Verdict said the amount shoppers are set to spend during the Christmas period will fall by around £535 million this year – the first drop in 20 years.
Experts have previously predicted that there will be a surge in spending as consumers rush to secure cheaper prices before the VAT rate increases.