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Up to £10.3bn could be ploughed into the UK’s hospitality sector if a reduction in VAT is announced in the government’s Autumn statement next week (23 November).
Research from commercial insurer NFU Mutual found two thirds of consumers would increase spending if VAT is reduced, with over half (53%) of those likely to spend more on weekend breaks in the UK, eating out and hobbies and leisure.
A cut in VAT of 5% could provide the average UK adult with extra spending power of £547 per year, according to the report.
NFU Mutual, which surveyed 2,040 UK adults, said 67% of consumers would increase some spend as a result of VAT savings and 53% of these would increase spending on hospitality industries, meaning British businesses in the sector could look forward to a potential cash injection of up to £10.3bn.
Darren Seward, hospitality sector specialist at NFU Mutual, said: “The encouraging sign is that there is clearly an appetite for increased spending in the UK hospitality industry amongst consumers.
“With consumer spending coming under some pressure from rising inflation, the Chancellor’s decision to ‘reset’ fiscal policy could possibly include the option of cutting VAT by as much as 5% to support growth.”
Meanwhile, he added that in a “more probable” situation of a 1% cut, up to £2.1bn could be ploughed into British hospitality sector businesses.
