December 2008
In light of the Chancellors 'generous' 2.5% cut in VAT in this years Pre-Budget Report, I hit the streets to ask the public how their Christmas shopping was being affected.
As you can see, the general opinion is not glowing for the VAT rate cuts. It just doesn't seem to be enough to make the public want to increase their shopping this Christmas. The retailers themselves are having a much bigger impact on the way people are spending, offering sales of up to 50% before Christmas day, which must be a first.
Also, it is clear the way the media is following the Credit crunch is also making a difference on the public perceptions, as one man put it: 'people are frightened to death of spending money', and this is certainly the feeling of the majority of shoppers.
May 2009
It is still hard to assess the impact of the VAT cut just before Christmas last year. From my Vox Pop in December, it was clear that the people of Preston needed more than just a 2.5% reduction in order to make them forget their economic woes and spend wildly on the run up to Christmas. It does not seem to have impacted sales in the way the Chancellor was hoping.
In general, the credit crunch did affect the way people spent over Christmas. According to one newspaper poll, 59% of people asked said they had changed their habits over the Xmas season. This has also occurred in 2009, with many people continuing to curtail their spending and constantly on the look out for the cheapest option.
The high street has suffered as a result. The retail sector has been hit extremely hard, with the credit crunch responsible for the death of Woolworths after 99 years of supplying communities with household goods. This has left ugly holes in the high streets, not just in Preston but nationwide.
Woolworths is one of many retailers that have been forced to abandon Preston High Street
Preston's high street has an empty shell where the Woolsworths used to be. It is still recognisable as a Woolworths, with the red lettering still advertising a brand that no longer exists and the shelves still visible through the glass. It has been empty for several months now, along with other shops that retailers have abandoned due to lack of profit. The Works, JJB and many independent retailers have been forced to leave their premises in the last few months, only to be replaced by pound shops and other cheap retailers. It is these cheap retailers, such as 'Poundland' that have really benefited from the credit crunch. Many have sprung up all over the country, filling the gaps made by failed businesses and empty Woolworth stores.
Shoppers are still convinced that the VAT cuts did not affect spending in the way the Exchequer hoped. Many of the people I asked said that their situations have grown much worse since Christmas, and that the 2.5% cut is even more of a joke now then it was originally. The bleak picture of the retail sector during the credit crunch has not been changed by the VAT cut. Something more will have to be done to increase spending, as the VAT cut is too superficial to really help those in need. "Cutting VAT is all well and good, but what is a 2.5% saving really going to achieve," said one shopper. "You only notice the difference on expensive stuff like cars and electronics. I am a joiner by trade and I haven't worked in over two months, how is a saving of two and a half pence on the pound going to help me?"
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