by Trevor Sturgess

Retailers are looking forward to a happy business Christmas as shoppers rush to beat the VAT increase on New Year’s Day.

A survey by the British Retail Consortium found that 42 per cent of retailers believe this Christmas will be better than last year’s. The other 58 per cent said sales would be the same as 2008 while none of the respondents thought sales will be worse.

Almost half of retailers expect greater discounting in the run-up to Christmas, with only a quarter expecting less. Around 53 per cent think December sales will be boosted by customers bringing their purchases forward to beat January’s VAT increase.

But nearly half of retailers said sales in the New Year will be harmed by the increase in the VAT rate to 17.5 per cent restored on New Year’s Day.

Stephen Robertson, British Retail Consortium Director General, said: “There’s some good news here but we’re not out of trouble yet. I’m reassured that retailers are more confident about their prospects this Christmas but remember the comparison is with dramatic sales falls last year.

"There are more customers willing and able to spend now but, for many retailers, it’s taking even more discounts to persuade them to buy. The impact of the VAT increase is a concern for half the respondents but other clouds are gathering.

"Customers are cautious. Jobs are a big worry and neither will be helped by the tax-battering promised by the Chancellor.”