Marketers warned of “stretched middle”

The forthcoming VAT rise could have an unexpected impact on middle income consumers as the Exchequer takes £6.2bn out of consumer spending with the 2.5% hike in January.

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According to Acxiom, even seemingly comfortable consumer groups may struggle as households referred to by politicians as the “stretched middle” have to cut back on spending.

Stephen Whyte, Acxiom Europe CEO, says: “The VAT rise may seem insignificant, but is actually going to have a major impact on many UK households’ finances.

For marketers, Affordability gives a unique insight in that it shows the effect of the increase not just at a national or regional level but at household level.

This throws up some interesting detail of who is really going to be impacted by the VAT increase. Our analysis is helping brands plan campaigns to ensure budgets are not wasted on targeting the wrong consumers.”

After allowing for outgoings such as mortgages and council tax, the average UK household will have £225 less discretionary income after the rise. For some groups, the drop will be as much as £448.

Married couples living with grown-up children, couples aged 25 to 34 with no kids and married pensioners will be the hardest hit, the company warns.

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