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What effect will the measures in the Pre-budget Report have on the retail sector?

25 Nov 2008

Retailers welcomed the 2.5% cut in VAT to 15% but many think it will only result in a limited boost to a sector that has felt the effects of the credit crunch in a number of areas. There is no law for stores to reduce their prices, and some will use the cut to improve their profit margins, or to provide bigger discounts on a small range items. The British Retail Consortium welcomed the measures. Director Stephen Robertson "a modest, but welcome boost for hard-pressed households", but expressed that income tax and interest rate cuts was also necessary. He also said the 13-month limit was not long enough: "The chancellor himself says we will still be in recession at the end of 2009. That may be economically and practically too soon to reverse this”. Sales on the High Street fell by a lower-than-expected 0.1% in October. The decline was much less than the 0.9% drop had been predicted. It is retailers centred on “value” that are gaining most from the downturn with these stores expanding their sites and continuing to recruit nationwide. What do you think the effect of the measures announced in the Chancellor’s Pre-budget Report will be? Vote in the retailmoves.com poll

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