Consumer spending rebounds from ‘VAT hangover’, but UK shoppers remain cautious

Brits blame the previous Government for the strain on household finances

New figures released today by eBay reveal that whilst January’s VAT rise had a profound impact on consumers’ short-term spending behaviour, sales in February returned to normal seasonal levels. Yet despite this, consumer discontent remains high, with blame for the rise firmly placed on the previous Labour government.

The eBay data for big ticket items shows that average sales of dishwashers in December (when compared to November) usually increase by 12%. However, last December, the increase was a whopping 40%, and while January tends to see a small increase of 7%, this January actually saw a drop of 7%. Similarly, sales of fridges and freezers usually rise by 9% in December, but last December sales rose by 37% and dropped by 12% in January. Figures from this February show sales are levelling, with fridge and freezers up 6% (on January sales) and dishwasher sales decreasing marginally by 4%.

The findings of a recent eBay survey of 2,000 UK adults provide further evidence of this behaviour shift. However, UK shoppers are still feeling the pain and with the impending Budget, any more announcements could threaten fragile consumer confidence:

  • 49% said that January’s VAT increase has had a noticeable impact on their cost of living
  • 40% now budget in order to ensure they can afford basic necessities - almost half of women say this (47%) compared to only a third of men (33%)
  • 41% have intentionally reduced their spending since the rise
  • Over half of those surveyed (54%) have said that as a result of the Government’s economic policies (which include January’s VAT rise) they now have less disposable income available.
  • Consumer discontent is high with over two thirds (68%) thinking the upcoming Budget will further hamper consumer spending.

According to the results, UK consumers place the blame for the increased strain on their finances squarely on the shoulders of the Government – 57% hold the previous Labour Government responsible, and 40% find the current Coalition Government at fault.

Clare Gilmartin, Vice President of European Marketplaces at eBay, said: “With 17 million users in the UK and new fixed price goods making up 60% of sales, eBay is an unrivalled barometer of UK shopping habits.

“While the recent VAT rise only had a short-term negative impact on consumer spending, we know consumers are still feeling the pain as they are budgeting to ensure they can afford basic necessities. Although sales figures are rebounding, consumers are becoming more careful with their money, suggesting they appreciate the importance of shopping around for the best value items.

“The next couple of weeks will be crunch time for retailers who will be keeping a close eye on consumers’ response to the Budget, and both SMEs and consumers alike will be hoping there are no surprises that could harm the fragile state of consumer spending. The Government should focus on measures that will boost confidence, and in turn spending.”


Notes to Editors:

For more information please contact any member of the eBay team at Blue Rubicon at or call 0207 260 2700

Survey conducted amongst 2,064 UK adults by Populus in March 2011


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