They saw it coming... In a recent poll of 675 UK retail decision-makers, marketing agency More2 found that 68 percent of respondents were planning to up their prices when VAT increases. A mere 10 percent said they would absorb the cost.
To offset the higher cost, just 9 percent of the retailers polled said they would cut their marketing budgets, though 7 percent said they would have to make redundancies.
Demonstrating a rather laissez-faire attitude, more than one in five of all respondents didn’t yet have a plan in place of how to deal with a potential rise.
The chancellor has just ended his speech, confirming that VAT will rise to 20 percent effective 4th January 2011. What I want to know is how is that 5 percent of respondents that didn't have a plan going to react now? Will those that pledged to absorb the cost do so, even though there are seven months to go until the new rate takes effect? What are the wider implications of the rise?
Please join the debate and leave your thoughts in the comments box below.--MT