Less than half of UK consumers are planning on cutting their spending on non-essential goods when the rate of VAT is increased from 17.5 per cent to 20 per cent on 4 January 2011.

A survey by research company Retail Eyes shows that 52 per cent of people will not change their spending habits due to the tax hike.

Simon Boydell, marketing manager for Retail Eyes, said: "It appears from our survey results that consumers haven't made a conscious decision yet as to whether the VAT rise will change their spending.

"With recent news from The British Retail Consortium claiming consumer confidence has fallen for the first time in a year this should come as some relief to retailers.

"But there is still a lot of uncertainty among shoppers so retailers do need to consider ways to entice consumer spending both before and after the rise on 4 January."