Some 29 percent of consumers in Germany plan to make additional purchases during the temporary reduction in value-added tax (VAT), according to a survey published by the German market research institute GfK Tuesday.
As part of the economic stimulus package by the German government, the VAT rate will be temporarily reduced from 19 percent to 16 percent from July 1 until the end of the year. Provided that retailers and manufacturers pass on the reduction to consumers, the reduction in VAT is expected to lead to lower prices.
According to the survey among 1,000 Germans, mainly younger consumers are planning additional purchases in the next six months.
Consumers over 50 years old, however, are rather reluctant to spend, according to the survey. Older consumers fear “the deterioration of their own financial situation” due to the COVID-19 crisis.
Around one in three consumers expect the financial situation of their own household to deteriorate in the next twelve months, according to the survey.
“Due to the economic uncertainty, consumers are likely to plan their purchases very consciously and only buy what is needed, especially when it comes to more expensive purchases,” explained Petra Sueptitz, consumer insights director at GfK.