Spending vouchers are not a magic bullet for the high street

A handful of other countries have tried such schemes on a smaller scale, and the evidence has been mixed. In China, for example, where retail sales are still in negative territory, a study of 42 cities where almost £1bn was handed out, found the scheme’s ‘multiplier effect’ varied wildly.

Use of the vouchers, which in many cases could only be used when shoppers spent a set amount of their own money, triggered varying amounts of additional expenditure. In some cases the multiplier was as high as nine or 10, in other places less than three. Rural, elderly non-smartphone users were more likely to miss out, with vouchers designed to be spent in the city centres. 

There were also reports that Chinese shoppers were simply using the vouchers to buy essentials, like cooking oil and rice, which they would have paid cash for anyway, undermining the intention of sector-specific stimulus.

That’s why it is strange that Resolution’s report says that “despite the food retail sector performing strongly during the crisis, it would make sense to include that sector in order to allow people to buy essentials with the vouchers too”. Surely it makes no sense at all to offer state spending subsidies for essentials if you are trying to save bricks and mortar non-food retailers and restaurants.

With a jobs crisis just around the corner for millions of people, that £500 voucher might be judged as a handy 12-month insurance policy to help with the food shopping and just stored away for a rainy day.

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