Traders are confident the VAT increase will not hit them too hard.

Business owners in Sheerness town centre say they are confident they will adjust to the rise from 17.5 per cent to 20 per cent.

Some stores intend to freeze their prices and accommodate the extra expense in their overall business costs.

Brittain and Hobbs' sales director, Paul Jarvis, said prices would stay the same at the electronics store but they were having to contend with a lack of buyer confidence.

"There is a lot of scare mongering among customers," he said.

"But a lot of it is just in people's minds. They are happy once they realise prices are the same."

James Ludlow, of Cycle Sport, is also keeping prices down and is confident it will not have a huge effect on takings.

He said: "It's only another £5 for a £200 bike so it won't make a lot of difference."

Not all businesses will be able to charge customers the same - such as florist Daisy Chains.

Owner Sue Probert said: "Most prices will stay the same but not all.

"I will have to put the price up on some selections unfortunately, and some bunches might be slightly smaller."

Tony Mankelow , owner of Gemini Jewellers, is also having to contend with the high cost of gold but he expected customers would not be put off buying more expensive items.

He said: "There have been increases in the past and I don't think customers will think an extra 2.5 per cent is that much."