Absorb the VAT increase, consumers tell businesses

A study by accountancy software company Accountz has revealed that while 61 per cent of consumers feel the return to a 17.5 per cent VAT rate is fair, 41 per cent want businesses to absorb the increase.

Quentin Pain, founder of Accountz, said the survey highlighted the financial insecurity being felt by most Britons at the moment.

“The VAT increase is a major bone of contention for both retailers and consumers. Whilst it was inevitable, it is quite likely that it will impact heavily on consumer spending at a time when the high street is already in disarray and customers are staying away. It looks like 2010 could be quite a challenging year all round.”

More than half of consumers said they intended to cut back on their spending during 2010, as 39 per cent expect to see raised prices at restaurants and bars over the year.

Calls to cut restaurant VAT rate​

In December, Villandry and Kitchen Italia owner Jamie Barber urged large restaurant companies to lobby the Government​ into adopting a similar restaurant VAT rate to France, where businesses have had to pay just 5.5 per cent since July 2009.

"I would support any kind of lobbying to get the restaurant sector treated as it is in France in a lower VAT category," he said. "If you look at the very large UK chains, by virtue of the very large numbers of people they employ, it would only take three or four of these guys to get together and make an effective lobby."