News - VAT reductions in effect at hardware etailers, but is the saving enough?

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Today's the day that the Chancellor's VAT reduction comes into play, we take a look at core-component pricing.

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Read more.

It's nice to get an extra 2.5% off but unfortunately it's no-where near enough to encourage me to spend on PC hardware at the moment due the recent increases in UK prices due to the de-valuation of the pound against the US dollar.

The reduction is nice, especially since I was planning on building a new PC before xmas anyway.

Whether I'll regret not waiting a bit longer, further down the line, is something I won't know until then.

The cut in VAT encouraged me not to spend until it was in place, and I'll cheerfully pocket any savings it creates, but I certainly won't be buying anything I wouldn't have bought before as a result of it. It's nowhere near enough to induce me to buy anything I wasn't already going to buy.

So all it's done with me is perhaps to defer spending for a few days. And if the objective was, as the Chancellor and other ministers keep saying, to "stimulate spending", then I think it's rank stupidity on their part. It makes trivial differences in cost to small items, and for big ticket items (cars, etc) either you're going to buy or you aren't, and a couple of hundred quid saved on ten grand or more, while nice, isn't going to make a blind bit of difference to whether I buy a car or not.

And, of course, for many retailers, it involves a right hassle and a lot of time and cost re-pricing everything and printing new labels, stinting stickers and notices about changes to pricing in catalogues etc.

Personally, I think the effect was supposed to be psychological, making things feel cheaper, to encourage confidence. Instead, all it really does is encourage people to realise just how deep a hole the government have dug for us when they publish borrowing figures like they did, when they tear up their own spending and borrowing "rules", and when they signal that their giving us a bit of a sweetener now, and a flaming great tax bill in a couple of years time. It's a sugar-coating on some very foul-tasting medicine.

Oh, and instead of encouraging confidence, I think the net effect is scepticism, because the public aren't quite as gullible and stupid as Brown etc think, and a reduction in confidence because people are aware that if the government feel that this sort of unprecedented step is necessary, then the mess we're facing is really bad.


Small wonder, then, that the only poll I've seen so far about Brown's popularity and the trust people have in him over running the economy has seriously nose-dived since the P-BR. Not helping, of course, is that the government pump hundred of billions into a bank rescue package, but is there any sign of banks easing off on their lending squeeze, raising liquidity for small business or home owners? Precious little, if any. It hasn't worked. And nor will a trivial cut in VAT.

Whatever we do, the next few years are going to be painful. We're staring down the gullet of what might well be a very serious recession, we're staring down the gullet of the effect of excessive government and domestic spending for years, with the domestic bit encouraged by government (because they wanted the tax revenue), and now we get to pay the price.

Gee, thanks for that, Gordon. :rolleyes:

Samsung Spinpoint HD103UJ 1TB £77.54 > £75.89

A saving of £1.65?! I'm going to buy the company! And a George Forman Lean Green Fat Reducing Grilling Machine!

Guys, a 2.5% absolute shift on vat, doesn't equal a 2.5% relative shift in prices.............

I just wish sometimes ministers would have the spine to say "There isn't anything we can do" rather than waste money and make it worse. But in this case i think he believes his own spin.

the 2.5% drop in VAT means that something that cost £117.50 will now cost £115 instead.

indeed, which is a RELATIVE shift of ~2.1%

This is important, because its not 2.5% cheaper, oh no.

that's almost half a penny for every pound you spend!

or a difference of ~19% if you will :P