The rise in VAT in the UK to 20 per cent from today will have a major impact on the country's supply chain, it has been claimed.
A spokeswoman for Debenhams pointed out that the costs will be felt through the entire supply chain and this will be reflected in the prices which consumers eventually pay.
"We will aim to keep price increases to a minimum but there are cost pressures in our supply chain, including higher VAT, which will be reflected in some of our spring summer 2011 prices," she explained.
The representative added that the impact is likely to be felt by retailers all year, despite the government's claim that the move will raise more than £13 billion a year to help reduce the UK's high budget deficit.
According to a study by the Centre for Retail Research and online shopping group Kelkoo, retail sales could fall by up to £2.2 billion in the first three months of the year as a result of the rise in VAT.
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