Trade and Industry Minister David Cretney says he remains sceptical about the United Kingdom government’s decision to reduce VAT from 17.5 to 15 per cent.

The lower rate came into effect on Monday, and while there is a legal requirement for it to be applied by businesses over here, it's up to them to decide whether they pass the two and a half per cent saving onto their customers.

The move by the UK could lead to a ?40 million reduction in VAT receipts for the Manx government and Mr Cretney (pictured) sees it as a 'crude mechanism'.

He told Manx Radio:

"Who's going to go for two and a half per cent off something when there is turmoil going on in the high street in the United Kingdom at the moment.

"(There are) things you would never have heard of in the past, in terms of what's going on in retailing, and here we are in December and the sales have already started.

"We had Marks and Spencers - 20 per cent off all day, plus three for two. A number of other high street stores are doing that and more, so I don't think the two and a half per cent the United Kingdom have imposed on us via our (VAT) agreement is going to make any difference at all."

More on Friday's Mandate.