Mixed views on effectiveness of VAT cut

Two leading bodies have announced conflicting views on the effectiveness of December`s VAT (Value Added Tax) cut.

The Centre for Economic and Business Research (CEBR) suggested that the cut had given an `immediate boost` to retail sales, claiming that it has led to £2.1bn of extra sales.

But a spokesperson for the British Retail Consortium (BRC) refuted this, saying that there is no evidence to back up the CEBR`s claims that the VAT cut led to any sales growth.

The VAT cut was intended to encourage higher levels of spending within the economy, allowing consumers to make more purchases with less risk of falling into debt, and without affecting businesses` profits.

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