It's now been announced that there's going to be a reduction in VAT to get people spending again. If people aren't spending now, when it's coming up to Christmas and there are big reductions on everything anyway, what difference is 2.5% going to make?

Am I missing something here? Maybe I'm wrong, perhaps there are thousands of people waiting for this cut so they can go out and blow their saving to help the ailing economy. I for one don't think I'll bother.

I would agree. I can't see retailers cutting prices anyway. If a retailer can sell a product at £20, the price will stay at £20 and they'll just make a little more profit. It will make a tiny difference with the total in places that price things excluding VAT, but then most buyers in those places claim the VAT back anyway so they'll just pay a little less and claim back a little less.

I suppose the idea is that, rather than making a big difference to a few people, the government wants to make a little difference to everyone.

I can imagine that there might be a rush to buy just before the rate goes back up again but I can't see anything else of note happening.

We are not going to be any better off, £100 + £2.50 off, to pay for the cut our friend mr fuel is going to go up and smokers will be hard hit and drinkers also. Come on they are not daft

should have removed or reduced vat on electric/gas that would have done more good . its all political

This VAT cut actually adds to cost of all businesses that are vat registered. The reduction in VAT on fuel is to be replaced by an increase in the fuel tax. Therefore everyone pays the same at the pump. If you are registered for Vat you can claim back the vat content. If the fuel tax is increased you cannot claim this back. and being the cynical person I am whats the betting that when the Vat is put back up again in 13 months that the fuel tax will remain the same. this means that all businesses pay 2.5% extra for there fuel then after the next 13 mths everyone will be paying 2.5% more.

The rate cut is no incentive. People are worried about either losing their jobs or losing income on savings accounts. It would have been nice if they'd dropped VAT to 5% on restaurant food. Then the restauranteurs would have money to spend and help the economy and everyone'd be happy.

I assume you are a restauranteur? You don't seriously suggest that singling out spending on resaurant food for an extra reduction would make much difference to the people who are going to need help through the coming recession? Something like: "Let them eat cake..." updated to "Let them eat at McDonalds..."

It's even worse than you say:

Unless my arithmetical skills are escaping me it's actually £2.50 off of £117.50. This represents an actual price drop of approx 2.13% even if the total is passed on to the consumers.

Yes you are right it is 2.5 out of 117.5!! The government are unable to reduce VAT to less than 15percent, its European law I believe.

Thing is that they have been robbing Peter to pay Paul for so long that now Peters broke so they are giving Peter back some of what Pauls got... thing is all Pauls got is what he got from Peter and he's going to want that back at some point and probably with bells on... if you get my drift!

In other words we WILL end up paying for this pointless exercise in political survival at some point.

Exactly roy big con. Its the same principal with vat on booze its coming down bit tax is going up to keep the price the same and like you say 13 mnths time 2.5% back on vat but the price will remain the same. Well it won't because there will have been 2 more increases by then due to budgets in between. How does this help the small pubs and clubs already hit badly with the smoking ban and credit crunch "NONE WHAT SO EVER" Labour pack up and go before you ruin us.

Totally Brilliant !!!!!
Virtually no benefit to the consumer and businesses have the headache of changing all their accounts systems to accomodate the new rate.
It's not just a matter of changing the VAT content now but also making sure that any future refunds/credits are given at the correct rate.
And how long before we have to go through the whole process again?
Yet another piece of wonderfully 'joined-up' thinking ..... NOT !!!!!

If Labour robs Peter to pay Paul.......who is Paul foolishly going to vote for? How this Government must love this credit crunch excuse to hide their books and muddy the waters so that its difficult for anyone to see where they have wasted so much of our money over the last decade. Where has it all gone? If you are going to leave a sinking ship it doesn't matter how much you have overloaded it.

I agree that this 2.5% is not going to make any real difference as it is too small a change and people are not spendiing due to job loss fears. The money would have been better spent on bringing forward capital projects which would at least have had a long term benefit and created jobs.

Also one thing that seems to have been forgotten is that most pricing is fixed at price points e.g. £9.99. Retailers are not going to change these to say £9.78 to reflect the VAT reduction as this is not a price point.

The VAT reduction was more a political move than an economical one which is not what is needed!

Too late BFB! Labour has already ruined our Country and generations will be paying for their miss-management. When will we ever learn that Labour always leaves this country in a mess.