A year ago, when the Chancellor announced that he was reducing VAT by 2.5% for a year in order to stimulate the economy, the financial media decried the measure as useless saying that it would not make any difference to the shopping habits of most people.

I remember doing a post which pointed out that everyone would gain a small amount every time they did their weekly shopping as VAT is levied on many everyday items e.g. confectionery, cleaning materials, sanitary goods, clothes etc. Some shops give itemised bills which show which goods, have VAT added and it can be surprising how those pennies add up over time.

The media reporters were concentrating on cars, electrical goods and luxury items and forgetting the added cost of things like meals out and services used when moving house (solicitors, moving firms, estate agents, building work)

Maybe I was more aware than some younger people because I remember when the Thatcher government doubled VAT soon after it came to power in the eighties. They even applied it to the power companies until public opinion forced the “Iron lady” to make one of her rare U turns!

In a TV interview recently the conservative member of parliament would not rule out raising the level to 20% or more….draw your own conclusions!

Now the same financial reporters who decried the cut last year,  are predicting dire results in the retail trade when the VAT rate is restored to 17.5% on January the 1st.  As I said, what a difference a year makes.