This interesting article, Darling’s VAT cut ‘had no effect on consumer spending’, was published in the The Guardian recently.
Though we heard much of how the decrease in UK vat rates caused a greater influx of Irish grocery shoppers to Newry, Enniskillen and all points north of the border, it appears that it didn’t do much to cause UK consumers to spend more – as was originally hoped.
In a survey carried out by PriceWaterhouseCoopers:
The company interviewed 2,000 consumers and found that an overwhelming 88% said that the VAT cut had not prompted them to spend more on goods or services.
More interesting was the following statement:
The respondents also dismissed the measure as insignificant when compared with other economic factors, citing reduction in income and economic uncertainty as more potent influences on their spending.
With the Vintners Federation of Ireland calling on the government to cut VAT in order to save their own publican skins, one wonders what impact that actually would have here in Ireland.
Will a cut of VAT here in Ireland encourage you to spend more – in pubs or anywhere else? I’m guessing that we’ve got bigger problems to worry about at the moment.