This year's cut in VAT did not boost the economy in the way the government intended, according to new research.
A survey by PricewaterhouseCoopers (PwC) has found that only eight per cent of people state they upped their spending goods and services because the tax rate dropped from 17.5 to 15 per cent.
Furthermore, five per cent of those asked revealed that they were unaware the change had even taken place.
The measure was announced in this year's budget as a temporary step to increase spending and is set to be reversed on January 1st 2010.
Despite its failure to have an impact so far, Stephen Coleclough, tax partner at PwC, believes the cut could yet have the desired effect before the year is out.
He said: "It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their new year sales in anticipation of a VAT increase in January."
Recently, a study by PwC revealed that 90 per cent of high street retailers are discounting goods and this is expected to continue until the middle of 2010.
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