President Sakozy of France among others critics have lambasted the cut in UK VAT for a year to stimulate the economy. Most of them said it was a waste of time and it has not had any effect on consumer spending whatsoever. According to The Centre for Economics and Business Research (CEBR) the critics are wrong, the cut has indeed stimulated spending by and extra 2.1bn.
The centre is so taken by the effect of the temporary cut of 2.5% in stimulating retail sales that its asking that the cut is extended for another year when it expires in January 2010.