Nine out of ten shoppers believe the government's VAT reduction has had little or no impact on their spending, new research has found.

About 88% of respondents to a PricewaterhouseCoopers survey of 2000 consumers believe the government's VAT 2.5 % cut has had little effect on spending habits.

Five percent were not even aware the VAT reduction existed.

The government made the decision to reduce tax believing it would bring a much needed stimulus to the UK economy.

Stephen Coleclough, tax partner, PricewaterhouseCoopers LLP, said the reduction had not had a significant impact on spending habits..

`The rest of the year will demonstrate whether the cut can still have the desired effect. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their New Year sales in anticipation of a VAT increase in January,' he said.