MARKET TALK: VAT Rise To Squeeze UK Discretionary Income-Shore

1311 GMT [Dow Jones] The rise in value-added-tax to 20% from 17.5% from Jan. 4 next year will squeeze discretionary income in '11 and will make it harder for retailers to maintain performance levels, Shore Capital analyst Clive Black says. However, Black adds the impact will be partially offset by a lower corporation tax rate. Says food retailers will materially outperform in general retail spaces due to guaranteed footfall. Says the VAT rise is no shock, causing a spike in costs for retailers at the year end, and the continued exemption on food and children's clothes will be welcomed. Says passing on charges to consumers is unavoidable. DSG +4.8% at 29p, M&S +3.2% at 354p, Next +2.8% at 2201p, Tesco +1.9% at 396p. Sainsbury +0.5% at 331p. (simon.zekaria@dowjones.com) Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com (END) Dow Jones Newswires June 22, 2010 09:11 ET (13:11 GMT)