New research has suggested that a reduction in VAT could boost consumer spend across tourism and hospitality by 35.5 per cent – including spending on eating out, hobbies, leisure, and UK weekend breaks (hotels, city breaks and tourist attractions).
Overall, 67 per cent of people said they would be likely to spend more, in the event of a VAT drop, of which 53 per cent said they would spend more on tourism and hospitality specifically (which comprises 35.5 per cent of the total).
Clothing, electrical goods and home and DIY products could benefit from a spend hike of 58 per cent in the same time.
Spend in high street and online retail stores could rise by 51 per cent and 49 per cent respectively too, according to the new report from commercial insurers NFU Mutual.
“As business rates, Brexit and rising inflation continue to put immense financial pressure on businesses, the Chancellor has the opportunity to ease some of those concerns at the Spring Budget,” says Frank Woods, retail sector specialist at NFU Mutual.
“There is of course no guarantee that the spending power of consumers will be ploughed back into UK businesses …[but] the encouraging sign is that there is clearly huge appetite for increased spending in UK retail and tourism sectors, and that many people see VAT relief as an effective means to inspire it. “
The group suggested that a cut of just 5 per cent in VAT could provide the average UK adult with over £500 more spending power a year, equalling a cash injection to British businesses of over £19b.
Elements of the hospitality sector have long campaigned for a reduction in VAT. It is currently set at 20 per cent.
Most recently, the VAT Campaign group sent an open letter to MPs asking for a cut on food and drink VAT, while groups including the Association of Licensed Multiple Retailers (ALMR) and the British Beer and Pub Association (BBPA) have also leant their support to the campaign.