Ken McMeikan, Gregg’s chief executive, said: “We are very pleased that the government has listened to the bakery industry's concerns and applaud them for simplifying the rules on VAT applicable to freshly baked products.
“This is great news for customers and I would like to thank them and all our staff for their wonderful support.”
After the government U-turn, VAT will not be charged on pasties, pies and sausage rolls that are fresh from the oven and cooling down on shelves. But savouries that are being kept hot in heated cabinets will still be liable for VAT.
Financial specialists Shore Capital said that Greggs’ management – in particular McMeikan – had “rallied his troops in an effective manner and shown a real resonance with his customer base”.
Analysts Clive Black and Darren Shirley said: “A bi-product from the whole Whitehall farce has been that Greggs’ national profile has been markedly enhanced. An enhancement that would cost a small fortune in marketing terms, from which the group’s ongoing national expansion should benefit.
“Greggs’ may not have been so well known in the southern and western reaches of England in February, but it is now.”
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For press coverage of the government u-turn, click here .