The VAT hike could be enough to put weak grocery retailers under, a leading administrator has warned.
Richard Fleming, UK head of restructuring at KPMG, who oversaw the administration of Threshers, said: "With VAT now confirmed at 20%, we could see consumer spending drop by billions. Those retailers teetering on the edge may find the VAT rise pushes them over."
Retailers were also disappointed that the 2.5 percentage point hike, on 4 January, would affect one of their busiest trading periods.
"While the government has provided plenty of notice, the date of the change is somewhat disappointing as it is so soon after Christmas and right in the middle of the January sales," said Sainsbury's CEO Justin King.