TESCO Takes Advantage of VAT Cut With 50% Price CUt

Here is what Guardian reports on the TESCO price cut.

In a sign that retailers are determined to slash prices to try to generate some Christmas cheer, Tesco also cut the cost of 1,000 items by up to 50%.

Officially the cut in VAT from 17.5% announced in the pre-budget report does not come into effect until Monday, December 1. But the three companies hope to lure shoppers by cutting the VAT on all applicable non-food items to 15% on Friday.

"We know that many families will start their Christmas shopping this weekend as pay packets arrive and we don't want customers to miss out on the cut in VAT," said Richard Brasher, commercial director at Tesco.

Yesterday the heads of a dozen of Britain's biggest retailers, including Sir Stuart Rose of M&S and Arcadia's Sir Philip Green, took part in a conference call to discuss how to implement the cut. It is unclear whether M&S will manage to reduce prices on December 1, with a company spokeswoman only saying today that it was committed to pass on the VAT cut.

The Sun reports that the cuts will be a huge boost for TESCO, who is desperate to encourage shoppers back to the high street and kick-start the economy.

"The price war comes after Marks & Spencer had its biggest one-day sale for four years last week, cutting everything by a fifth, and Debenhams slashed prices by £200million for three days."