Buying a car, electrical goods or even a cup of coffee and a bun now costs more.

A new car is likely to cost an extra £300, a flat-screen television £10 or so and a coffee and a bun, depending on where you go, an extra 25p.

Chancellor of the Exchequer George Osborne says the VAT increase to 20 per cent will raise £13 billion that will help close the gap between what the country spends and what it borrows.

Labour leader Ed Miliband unsurprisingly takes the opposite view, warning that the hike will damage economic recovery.

He said that on the day the FTSE 100 surged by more than 140 points to break the 6,000 mark again, before falling back.

The two-and-a-half per cent rise is a better alternative than increasing employers’ National Insurance payments, says Matthew Wildman.

Since 1991 he has run his own business, Wildman Computers, based in West Street, Baildon.

He says: “I had a lady in wanting to buy a laptop. It was £423 before VAT went up. With the increase it’s £9 more. The extra is a trip to the pictures or a meal out.

“Every time you employ a person, the Government charges you another 11 per cent. You get nothing back for that.

“There’s been a lot of scare-mongering. White goods tend to cost between £200 and £800, so two-and-a-half per cent extra isn’t going to make much difference to people.

“It’s a tax on people, not business, which is the Conservative way. This type of tax is spread over everyone. I charge lower prices to help local people. To have National Insurance go up would have been a real burden to employers.”

About 1,000 local business people are members of Bradford Chamber of Trade. The organisation’s secretary, Val Summerscales, says Bradford’s bargain shops were likely to do well if bigger retailers put on the VAT increase right away.

She says: “It’s too early to tell because at the moment they are still selling sale goods. They might decide to wait until those stocks run out before making the change.”

This is more likely to be applicable to bigger retailers, she thinks. Smaller retailers would probably have to put on the extra VAT right away.

“It’s all about marketing the goods you sell and people’s perceptions about what they want to buy and when they want to buy it,” she added.

Yesterday morning, despite wet weather and being the day after the VAT rise, central Bradford was reasonably busy.

Mrs Summerscales was right about the sales – even Poundworld is offering a 50 per cent reduction to clear unsold Christmas stock. Other shops were offering up to 75 per cent off certain items.

As reported in yesterday’s Telegraph & Argus, Bradford supermarket chain Morrisons intends to go the other way and cut the cost of 44 grocery items, amounting to a saving of up to £40 a week.

Richard Hodgson, Morrisons group commercial director says: “These are not 1p price cuts. These are genuine savings on essential groceries that will cut the cost of weekly shopping significantly at a tough time for families.”

Big retailers of food and domestic items are, as Mrs Summerscales suggested, better placed to absorb extra VAT. In spite of increases in the costs of wheat, fuel and power, Morrisons, Sainsbury’s and the Co-op all reported healthy rises in profits last year.

Poundworld, with a reported turnover of £108m, intends to invest £150m in new stores this year.

For the 1,100 members of Bradford Chamber of Commerce, ranging from international companies to firms with 20 employees, it’s a matter of waiting to see what happens, says Chamber president Harold Robinson.

“Retailers, particularly in the Kirkgate Centre, are concerned about footfall; but others are not overly concerned.

“When VAT came down under the Labour government, as a stimulus to trade, there wasn’t a sudden influx of people shopping.

“Shoppers now might curb their spending a little bit, but business is waiting to see,” he added.