According to a recent report the level of borrowing in the UK could increase this week, as consumers try and find ways to fund the purchase of more expensive items before the VAT increase kicks in at the start of January. Whilst the 2.5 percent increase in VAT won’t make a significant difference to the price of small, everyday items it can have a big impact on the amount paid for more costly items, and many will therefore be rushing to buy big ticket items before the VAT rise comes into play.

For those thinking of buying things such as televisions, fridge freezers, washing machines, computers, and other appliances and gadgets, the VAT increase could make a big difference and many may therefore be keen to make these purchases now and save on the 2.5 percent increase. However, with Christmas only just over many may not have the ready cash to pay for the items having already spent a fortune on Christmas.

Some industry officials believe that many of those determined to beat the VAT rise will turn to borrowing to fund their purchases, and this could mean turning to credit cards, overdrafts, and even personal loans. This could see the level of borrowing increase over this coming week, as consumers race to make their purchases before the VAT increase and whilst the sales are still on.

One official said: “There will be many people who may have been planning to make a larger purchase or even book a holiday in 2011, but want to save money by avoiding the VAT increase and by making their purchase whilst the sales are still on. For many of these people the only option when it comes to funding their purchase may be to borrow money.”