How much will you spend this Christmas?

Christmas shoppers are buying more online than ever before, but where do recent cuts, forthcoming VAT rises and online fraud threats fit into the festive spend, asks Emily Jenkinson.
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In a recent report, commissioned by online shopping comparison site, Kelkoo, research found that overall sales are expected to go up by 1.3% this Christmas. But are we really feeling richer?

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While we may be out of recession, we are still in a time of economic uncertainty – yet to feel the impact of the cuts and yet to feel the impact of the VAT rises in January – so why are we spending more?

According to Simon Goodall, Director of Strategy at Saatchi and Saatchi X, “last month’s figures actually showed consumer confidence going down, but I think that’s what’s interesting: consumer confidence for the future is down, but people’s confidence about their current financial state is pretty stable.”

We might be in a festive bubble at the moment, but surely this must burst soon? “Yes, I think that, overall, the VAT cuts are going to take quite a large amount of money out of the economy and have quite a large effect,” says Goodall, “I can see 2011 being a very tough year, both in terms of the VAT rise and as consequences of the cuts really start to hit people’s current financial situations.”

While some might wish to tighten their belts before the storm comes, many are making hay while the, er, snow falls. Indeed, Richard Stables, CEO of Kelkoo has urged shoppers to spend before the VAT rises come in, commenting: “Every household in the country is facing a steeper VAT bill, amounting to an additional £1.16 per day from the 4th January. Consequently, it is advisable to make big ticket purchases sooner rather than later and avoid leaving purchases to the last minute.”

At many, it seems, are following this advice, with 39% of those surveyed saying that they were planning to make a big purchase and do their sales shopping before January, when the financial hangover from Christmas may be worse than in previous years.

While people may be spending more than they did last year, this doesn’t mean they’re not shopping wisely. On the contrary, while shoppers aim to save money by doing most of their shopping before January’s VAT rise, this year, online spending is predicted to grow by a whopping 28.8% according to Kelkoo’s research. “On the high street, shoppers could end up paying 15% more on average than the best online prices for this year’s Christmas must-haves, so we advise everyone to plan in advance, shop smart and head online to help stretch their budgets further this year,” says Stables.

While many may be heading online this Christmas, security concerns about internet shopping are an issue for some. This is according to a recent YouGov survey, commissioned for Norton by Symantec, which found that one in five were worried about identity theft fraud, falling victim to cyber crime, downloading malware or viruses and not trusting the sites they buy from.

To combat such risks, Norton suggests using a credit rather than a debit card, employing strong passwords, looking for visual cues such as the VeriSign Trust Seal to identify safe websites, avoiding divulging personal information such as usernames or passwords and using a good security software suite on your computer – (it, needless to say, would recommend Norton).

This year, the festive spend may be higher than last, despite consumers being more savvy than ever before about where to find a bargain. However, the indications are that this reflects a growing gloom about what is in store the New Year, rather than burgeoning confidence in it.

Emily Jenkinson is interiors writer for furniture and interior design website