One of Britain’s biggest retailers hit out at the government’s plans to cut VAT as part of Gordon Brown’s emergency economic rescue package, arguing that the cut will make little difference to a high street already slashing prices in the run-up to Christmas.

The retailer, which did not want to be named, said the mooted temporary cut in sales tax – it currently stands at 17.5 per cent but could be lowered to 15 per cent under European Union regulations – would do little to stimulate demand.