Shoppers prepare for price rises

Head onto the high street and there are offers galore - up to 50% off and buy one get the second one half price. And that's before the January sales kick-in.

There are big discounts in most shop windows at the moment but one offer's about to end - the VAT cut.

For the last year we have been paying less tax on items like clothes and DVDs. The government did it to get us all spending again, but did it work?

"It's not made me spend more but it's nicer to buy something for cheaper than advertised, nice to save a few pennies here and there," said Ruth, from Huddersfield.

Since December 2008 we have been paying 15% tax on alcohol, clothes and large goods like plasma TVs or fridges.

Twenty-five-year-old Ruth added: "The thing I think it affects most are the big products, when you're buying the little bits little pennies help but don't make a big difference.

"If I needed a big purchase I'd go and buy it now because of the VAT."

That's because from January 1 2010, VAT is going back up to 17.5%.

The cut was brought in by the Chancellor Alistair Darling to get people spending on the high street again to help retailers and the economy.

"I think it was a bit of a token gesture," said Adam Robson, from North Wales, who works in the retail sector.

He said: "I don't think anyone thought, 'Oh let's go out and shop because I'll save 2.5%'. I don't think it has had that massive affect that people probably hoped it would or the government hoped it would."

Things have got better though, according to the building society Nationwide, consumer confidence is at its highest level for a year and a half, after hitting a record low in January.

Tom Ironside, director for Business Environment at the British Retail Consortium, said: "We have seen a recovery over the last six to eight months, but it has to be remembered that's against very poor performance back in last September, October, November.

"Retailers have been engaging in very fierce discounts offering real value to customers so it's very hard to get at the impact of what that 2.5% reduction as been."

Department store John Lewis says it took more money last week than in any other week in its history.

The £110m the shop took in sales in the week to Saturday, 12 December, was an eight per cent increase on its previous best-ever week, seen in 2007.

But let's not forget there have also been high street casualties this year - Zavvi and MFI both went under and today Borders bookshop chain will close all its stores after going into administration.

Experts say the economy still looks uncertain for 2010, unemployment is still rising and putting the VAT back up is one way the government is trying to pay back its massive debt. The fear is it could actually stop people shopping.

"I'm looking forward to the January sales," said Beverley. "If it goes up things will be cheaper with sales anyway, but I don't think it'll put people off."