The government is considering a temporary VAT cut to help boost consumer demand and confidence.
The Times has reported that Chancellor Rishi Sunak is concerned the combination of low consumer confidence and social distancing rules will mean the reopening of retail shops will have a limited effect on boosting consumer spending. A decision on the VAT cut will be made when data is available on whether the easing of the lockdown has prompted a sufficient uptick in retail sales.
Sunak said: “The issue is not so much that they don’t have the cash, because they’ve been saving over the past few months, it’s whether they have the confidence.”
Helen Dickinson, chief executive of the British Retail Consortium, told The Times that she backed a VAT cut. “The reopening of non-essential shops from today is unlikely to deliver immediate relief, she said. “The government should consider options to stimulate demand, such as a short-term reduction in VAT or a temporary income tax cut for lower-income workers.”