Latest research suggests that UK retail sales will show a modest 2% growth during December, ahead of VAT increases next month.

According to research group Planet Retail, although many shoppers have kicked off Christmas shopping early as they seek to spread the cost, a late spike is also likely.

Many consumers will wait for discounts, launch a Christmas Day online shopping binge or cash in on big ticket items before VAT increases in the New Year, from 15% back up to 17.5%, Planet Retail said.

Marks & Spencer, New Look and House of Fraser have all claimed they will not start pre-Christmas discounting. Providing this happens, price-savvy UK consumers will be forced to pay full price just before Christmas.

However, according to Planet Retail, if one of these retailers buckles and starts discounting, the rest will follow.

While the reduction in VAT brought in November 2008 did little to boost consumer spending, the rise is expected to have a sharper impact.