THE cuts will have a knock-on effect in shops in Taunton.

Shoppers already face higher prices from January, when VAT rises from 17.5% to 20%.

Now retailers in Taunton – where almost 40% of jobs are in the public sector - are concerned about job losses at County Hall and elsewhere.

Town centre manager Graham Love said: “Local wage earners will be looking for jobs and will have less money to spend on consumer goods.

“Taunton has a significant percentage of local employment in public sector jobs and inevitably that will have a knock-on effect.”

Mr Love said businesses faced tough decisions, including whether to pass the VAT increase onto customers or becoming “stretched in their margins”.

But he said Taunton traders were well-placed, with fewer empty shops than many other South-West towns low levels of crime, a clean town centre and strong promotion to the local community and beyond.

“Forecasts suggest there will still be some growth in 2011, although it will be very slight,” added Mr Love.

“Taunton is well-placed, although there is no room for complacency.”