VAT hike leads to 3.7% sales fall

The VAT increase is being blamed for a 3.7% decline in retail sales in January which will result in job losses, economists and retail groups predict.

The Government’s VAT hike of two percentage points to 23% which came into effect at the beginning of January is being blamed for a fall in retail sales. Retail groups said not even the traditional January sales could encourage consumers to spend their money. The Ibec group, Retail Ireland, said consumers had spent money earlier in the year in November and December and then shunned the sales in January.

Chief economist with Bloxhams, Alan McQuaid said: “The bottom line is that consumers remain under immense pressure, with stealth taxes announced in the December budget further set to eat into disposable income. Lower interest rates will ease the pain to some degree but not enough to put spending back in the black.