What they WILL notice is when it ends. At the time most thought the crisis was someone else’s problem. Now they are acutely aware of the prevailing insecurity and consumers will treat such an ‘increase in VAT’ as a kick in the teeth.
Then there’s the warning that Brown ignored (second story) and another bit of news today:-
Fujitsu to axe 1,200 British jobs Fujitsu plans to axe 1,200 jobs in the UK because of lower than expected revenues. (UKPA)
Christina
THE GUARDIAN 26.8.09
Darling's VAT cut 'had no effect on consumer spending'
Study by PricewaterhouseCoopers shows 88% of people said tax reduction had not prompted them to spend more
Last year's cut in VAT from 17.5% to 15% has had little or no impact on consumer spending, according to a survey by consultants 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.
The news will stoke renewed criticism of the government's £12bn VAT cut, made in last November's pre-budget report by the chancellor, Alistair Darling, which the Conservatives ridiculed at the time as ineffective.
The survey's respondents also dismissed the measure as insignificant when compared to other economic factors, citing reduction in income and economic uncertainty as more potent influences on their spending.
Moreover, 5% of those polled were unaware that there had even been a cut in VAT, which is set to be reversed on 1 January next year. Only 8% of people said they had boosted their spending as a result.
Stephen Coleclough, tax partner at PwC, said: "These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers' spending has been unaffected by the VAT cut.
"The rest of the year will demonstrate whether the cut can still have the desired effect. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their new year sales in anticipation of a VAT increase in January."
EVENING STANDARD
26.8.09
Hedge fund boss accuses PM of ignoring crunch alarm bell
Paul Waugh, Deputy Political Editor
Gordon Brown ignored a stark warning that "toxic" bank loans could lead to global financial collapse, a leading US hedge fund chief has revealed.
Jim Chanos said that Mr Brown, while Chancellor of the Exchequer, was given a briefing that predicted banks were in dire danger - more than a year before the crisis hit last year.
Mr Chanos, who made his name correctly predicting the downfall of Enron, said that Mr Brown and other G7 finance ministers were told of the "canary in the coal mine" but chose to carry on regardless.
His remarks were today seized on by shadow chancellor George Osborne as proof that Mr Brown failed to act to protect Britain's economy from the looming financial crisis that triggered global recession. "We all know Gordon Brown didn't fix the roof when the sun was shining - and here it appears is yet another example of him getting clear advice at the time that that was a mistake," said Mr Osborne.
The revelations are an embarrassment to Mr Brown, who hopes to fight the general election by highlighting his role in steering the UK through the downturn.
At a closed session at the US Treasury in April 2007, G7 finance ministers were warned that banks were holding massive loans that could never be repaid. Mr Chanos told a BBC Radio 4 documentary: "We were completely and officially ignored." .
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