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UK retailers say gadgets will be cheaper on Monday

Just not by much

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If you thought retail giants were all just money grabbing b***s, then Monday’s VAT reduction could just prove you wrong. Because Register Hardware’s found that most will – contrary to popular belief - pass the 2.5 per cent saving on to you. But the discounts won’t amount to much.

Think of it like this, when the government cut interest rates earlier this month, did the banks immediately pass the saving onto Joe Homeowner? No, the difference went into their respective coffers.

It would be easy for stores simply to raise product prices by 2.5 per cent, send the correct amount of VAT to the Chancellor of the Exchequer, and not change a single price tag.

Come Monday, though, if a store’s gadget prices haven’t dropped slightly then you’ll know something’s up. However, all of the retailers we spoke to shirked off such an outlandish claim.

“We want our customers to fully benefit from this reduction,” an O2 spokeswoman said. “O2 does not benefit from the reduction in VAT rate.”

But there’s only a paltry £8.75 saving to be had on the 8GB pay-as-you-go iPhone 3G, which currently costs £350 ($535/€421) through O2.

Phones 4 U made the same promise as O2. “We will be passing on the savings to our customers, who will be able to take advantage of the full price cut on all our products,” said a spokesman for the company.

However, you’ll only save £1.25 if you wait until Monday to buy a £50 ($76/€60) Jabra BT530 Bluetooth headset from the retailer.

High Street giant DSGi also told us that it’ll pass the cut down to customers, and it’s already done so. But don’t go thinking you’ll save bucket loads on a large screen LCD at Currys, because the saving on £3000 ($4593/€3610) 52in LG TV is actually only £75.

Several online retailers, including Amazon, also introduced cut-rate VAT offers ahead of the government’s official Monday deadline. Web-based PC parts firm Overclockers, for example, will already give you the saving, but on a £235 ($360/€282) Asus P6T Deluxe Intel X58-based motherboard it only amounts to £5.87 – hardly worth it, is it?

So the message seems to be that, yes, you will save a little if you keep your wallet closed until Monday, 1 December. But the real savings only come through spending lots, and if you’re spending lots then you’re probably too rich to care about the cut.

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