Financial experts say the effect of Chancellor Alistair Darling’s pre-Budget report on the design industry will be ‘negligible’.
Yesterday, Darling unveiled plans to pump £20bn into the economy and cut VAT by 2.5 per cent in a bid to stave off the economic downturn.
But Ian Cochrane, chairman of management consultancy Ticegroup, says he thinks the move will make ‘no difference at all’.
Cochrane says, ‘Why meddle with VAT when retailers such as Marks & Spencer are already cutting their prices? If Darling was going to cut it at all, he should have taken 5 per cent off.’
He adds, ‘It is worth going the fiscal route, but Darling hasn’t done enough and he hasn’t been creative enough.
‘What will help is the ability for small businesses with cashflow problems to spread tax payments, but then taxes are set to rise – so it’s all swings and roundabouts.’
David Anderson, founder director of retail specialist CADA Design Group agrees that the VAT cut will do little to alleviate problems.
He says, ‘Many retailers will lose customers whatever they do, and, coupled with lower profit margins from introducing significant price cuts, the bottom line will be eroded twice as fast.’
John Philpott, chief economist at the Chartered Institute of Personnel and Development, says, ‘There is certainly a good spread of jam today in this Budget. But with the bill so clearly “in the post”, including a hike in national insurance contributions for employers and employees just as the economy is expected to be recovering, there is a real danger that this Budget may do as much to slow medium-term jobs growth as it does to slow short-term job cuts.’