[M1ke]

Well I'm off to do some serious shopping now. Just what we all needed wasn't it!

Err, was it?

[andysmee]

If you're after camera gear perhaps.

But seriously, the million people who are losing their jobs before Christmas (possibly me included) are not going to rush out and spend more money, they are actually going to spend the same from the retailer's point of view. VAT does not affect the retailers' profits, they simply collect it and pass it on, all they have now is a mahoosive administrative problem to solve this weekend, effectively losing them money.

Ditto with the base rate, yes my mortgage will go down (at least I got lucky with have a base rate tracker), but I'm not going to spend the difference in the shops, I'm either going to save it or make overpayments in anticipation of needing a payment holiday next year when the going gets tough.

These measures will help soften the recession a bit but it does appear that the result will be a cut in public spending (again, and again, and again, ad infinitum), massive public debt and future taxation (probably stealthy - more speed cameras, road tax increases, tax on fuel or something)

Thanks for the soapbox

[john crossley]

That has to be an administrative nightmare for a retailer, not only do they have to re-price all thier stock, but re-print all their brochures and catalogues etc aswell.

You would have to spend an awful lot of money to actually make any real saving.

Example: Car current on the road price £9400
New on the road price @ 2.5% reduction £9200

[orangepeel]

I'd have saved £12 on me D90 had i waited... really worth it!

[simpbow]

Were gonna be in the same league as Iceland.

[john crossley]

And as for petrol.

A fuel duty rise will match the VAT cut, leaving drivers no worse off. However planned future rises in petrol costs, together with the end of the VAT cut by 2010, could lead a rising price for fuel.

[Markulous]

Originally Posted by john crossley

That has to be an administrative nightmare for a retailer, not only do they have to re-price all thier stock, but re-print all their brochures and catalogues etc aswell.

That's if they reduce their prices...... and there's nothing to make sure they do (even the government has acknowledged that it'll probably be only about half the retailers that will)

The whole initiative is (presumably) meant to give the 'feel good' factor and rather depends on everyone feeling good with the token 2.50% VAT offset by a 2p increase in fuel and higher NI. Personally, it hasn't made me 'feel good' and it looks like getting worse next year

[Rob Barron]

This VAT cut (temporary) is a cynical and pathetic attempt to make this idiot government and even bigger idiot chancellor look like they care about families and their plight this Christmas. Here are a few reasons why none of this will work:

1. A mad dash to the shops to spend now we are saving 2.5% (maybe)? You have got to be kidding. Look around you in your town centre and you'll see the shops are all having pre-Christmas sales to try and get you through the doors. They are knocking 20% to 50% off items anyway so who cares about a measly 2.5%?
2. People can only spend a finite amount of money. They haven't got 2.5% more money, the goods will cost 2.5% less. If the chancellor had spent this £20 billion on tax cuts so that our take home wages were higher, then we would actually have more money to do something with.
3. Shops will not be keen to cut 2.5% off the prices because they are still going to take in the same amount of money (people can still only spend a finite amount remember!) but give out a bit more stock. Although they will keep 2.5% more in the business instead of paying the exchequer, they will need a lot more than that to offset the amount they are losing in poor sales anyway.
4. People are not going to rush out and spend when they are seeing unemployment rising like a hot-air balloon and are looking cautiously at their own jobs to see if they might be losing them some time soon. I know several who are and my own job is not rock solid.
5. I typically give a tip of 10 to 15% for services and things so 2.5% is a pittance not worth even costing into my calculations of finances.
6. At some point very soon, this half a trillion pounds of debt has got to be paid back. It has to come out of OUR pockets so this is a poor sweetener now with a very bitter pill to come.

If I had the money right now, I would be buying the Canon 5D Mk II for Christmas. It would be costing me £2000. With this huge cut in prices, I would be saving £30. Now that might be enough to take my wife out for a pub meal over Christmas but it really is no big deal if you are spending that kind of money.

And for all you drinkers and smokers, be assured the amounts tobacco and alcohol will rise in the next budget have just been pushed up.... by another 2.5%

Cheers,
Rob

[M1ke]

^^^^^

What Rob said, except it would be a Nikon