VAT cut boosts home improvements market


A bid by the government to kick-start the economy with a 2.5 per cent cut to shopping taxes seems to have started paying off in the home improvement sector.

Last Monday Chancellor Alistair Darling announced the VAT cut in his pre-Budget report in a bid to encourage consumers to spend more and boost the economy.

And it seems that the tactic may be working. While sales are still broadly down on this period last year, they are well up on last month, as would be expected with Christmas approaching and the economy functioning normally.

Department store John Lewis, which trades extensively in homewares, has reported improved Christmas trading and a record week for online shopping.

Elsewhere Marks & Spencer, another retailer with a big homeware department and a dual presence on the high street and online, has been holding 20 per cent off sales.

It has kept many stores open until midnight to tempt customers into taking advantage of special offers.

Elsewhere, Debenhams has dramatically cut prices while administrators for Woolworths reduced some prices last week by up to 50 per cent.

One casualty of the looming recession has been furniture retailer MFI which was forced to call in administrators in October.

And Kingfisher, Europe’s largest home-improvement retailer and owner of B&Q, has reported a decline in its third-quarter UK sales.

The company warned that consumer confidence had been shaken across all its markets.