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I welcome the industry’s pragmatic and general acceptance of the impending 20% VAT rise in 2011.

The reaction to the necessary deficit reduction plan and scheduled public sector cuts could have been one of doom and gloom, but the Government’s six month notice period and sound economic rationale hit a chord with the majority of the UK’s retail movers and shakers.

I believe it is now vital to grasp the six month marketing opportunity, at the current VAT level, to cement the retail recovery and drive a bumper Christmas, ensuring continued robust sales momentum in 2011.

Let’s not kid ourselves, it will be tough and the January 2.5% rise will disproportionately hit the big-ticket item sector, including furniture, kitchen and bathroom retailers. Increased innovation, availability of consumer finance and effective marketing will be even more important to maintain the retail recovery in all sectors.

Consumer confidence is key and I see a buoyant housing market as the most important element in maintaining retail demand. The new level was not extended to the new build sector, which is a start, but the government needs to widen its consumer confidence support measures in the next 12 months.

Yes Mr Osbourne, we will take our medicine with good grace, but the government must do its bit to drive healthy demand, maintain confidence and reward the retail sector’s innovation, so we can swallow a necessary, but unpalatable, 2.5% pill.


Gerald Grimes
Managing Director
Hitachi Capital Consumer Finance