Following the announcement of a 2.5 per cent rise in Value Added Tax, revealed in the emergency budget this afternoon, voices from the retail sector have been critical of the tax hike.
The British Property Federation fears the rise will hurt retailers by cutting consumer spend and putting additional pressure on UK High Streets.
“The VAT increase is likely to have an impact on consumer spending, so retailers and their landlords will probably suffer," said Peter Cosmetatos, director of finance at the British Property Federation. "We expect the government to retain the zero-rating of new residential houses, although it is by no means clear in the budget documentation.”
Liz Peace, chief executive of the British Property Federation, said: “The VAT hike will put more pressure on retailers and with 12.6 per cent of shops standing empty, we could see more damage done to the High Street.
"What this means for landlords of shops is that they will see further downward pressure on rents, which will mean less cash for new development and investment in deprived areas.”