Market research survey shows British consumers are on spending rush to beat the VAT rise

Many of Britain's Christmas shoppers spent more than usual in 2010, and not only due to the lessening effects of the recession. With VAT set to rise by 2.5 per cent on 4 January, money-savvy Brits made their money go further by making their expensive purchases ahead of the new year.



The rise from 17.5 per cent to 20 per cent was announced back in June 2010, and was one of the most contentious elements of the coalition government's emergency budget. Despite a number of consumers initially stating that the increase would not affect their spending habits, the situation changed over the Christmas period.



According to a recent online survey of consumers, around 50 per cent of respondents said they were planning to buy more expensive gifts in the final months of 2010. While a 2.5 per cent rise will not make much difference on small purchases, larger investments such as cars or electronics could mean a difference of hundreds of pounds. That's not to say that added VAT on everyday purchases won't be felt, of course - with estimates that the average household will spend £517 more through the course of the year under the new VAT.

These results bear out Chancellor George Osborne's predictions that by delaying the VAT rise until January, the struggling British economy would receive a boost at the end of 2010. At the other end of the scale, 33 per cent of shoppers said their spending habits would not be influenced by the VAT rise at all, while 27 per cent alarmingly revealed that they were not aware of the proposed increase.



Many retailers are naturally wary of how the VAT rise will influence consumer spending in 2011 and beyond, as well as the cash flow problems it could cause, which may see businesses that weathered the recession finally going under. Consumers who take part in paid online surveys can help retailers gain a more reliable overview of the situation, as well as allowing shoppers to make their voices heard and potentially influence the decisions of retailers.



The rise in VAT may not all be bad news, however. Although many British citizens reportedly felt disappointed by the increase after election campaigns from the Conservatives and Liberal Democrats both opposed such action, the new VAT of 20 per cent brings Britain more in line with the European average, and some financial experts believe it may even have a stabilising effect on the economy.