It had been hoped the tax cut and retailers' discounts would encourage spending, kick-start the economy and temper the severity of the downturn.

The government has effectively gambled £12.5 billion of public money – on top of the £37 billion it spent recapitalising banks – on that scenario. Downing Street's strategy is based on getting people consuming again after the global collapse.

The fiscal stimulus package was revealed in the Pre-Budget Report last week, as the UK teeters on the brink of official recession. And yesterday, the strategy appeared to get off to a good start. Footfall in some malls was up on last year – with one reporting an all-time high.

Experts said reports indicated the Scottish economy remained resilient, despite the global downturn. Hamish Millar, the general manager of Buchanan Galleries in Glasgow, said: "The Christmas rush has well and truly started. We had a very busy weekend, especially on Saturday, as shoppers made the most of the dry weather to get started on Christmas shopping.

"A few stores had implemented the VAT reduction over the weekend, but most will be introducing the reduction from today."

A similar sentiment was found in the east. Rochelle Weir, the general manager of the St James Centre and Multrees Walk in Edinburgh, said: "Footfall is up on last year, but I don't think that's because of the VAT cut. We are up week on week. Footfall is hitting all-time highs. While the VAT cut may improve consumer confidence, I don't think it will have a massive impact."

The 2.5-point cut in the tax, to 15 per cent, was contained in the Pre-Budget Report. It was promoted as a spur to consumers to spend now and boost the economy, with measures to pay back the resultant public borrowing in years to come.

However, retailers complained it would cost them time and money at a critical time. Fiona Moriarty, of the Scottish Retail Consortium, said: "It has caused issues and problems for many retailers because of the scale of the changes required."

But she added: "The high street is very competitive at the moment. There are a large number of discounts and promotions being run by many retailers, and any footfall or upturn today is the result of the very heavy promotion, not solely because of reduction in VAT."

David Lonsdale, the assistant director of CBI Scotland, said the discounting from retailers was starting to have an impact. "There has been a lot of discounting and that message has been reinforced by the Chancellor's decision to cut VAT. That is a positive move for retailers, and shoppers are responding."

The UK government's code of practice allows retailers to pass on the VAT reduction at the till, rather than changing their prices, for two weeks, and it is thought many smaller firms will take advantage of this.

Amid the upheaval, economists have questioned how successful the VAT cut will be in boosting the economy, given that the reduction being passed on to consumers is so small. Even on big-ticket items, it is doubtful whether the savings will be big enough to get people to bring forward major purchases.

However, individual shops have introduced their own price cuts, far beyond the VAT trim. Store chains such as Debenhams, House of Fraser and Marks & Spencer have held bargain-buy days, with up to 25 per cent off everything.

Hazel Tierney, the operations manager at John Lewis in Edinburgh, said: "Our sales are growing week on week in the run-up to Christmas, and last week the division saw a 10 per cent week-on-week uplift on its sales.

"At the beginning of last week, there was an inevitable impact on trade when the VAT reduction was announced to come into effect on Monday. Sales picked up significantly towards the end of the week as customers appreciated the passing on of the 2.5 per cent benefit from the VAT reduction early."

The Edinburgh Chamber of Commerce chief executive, Ron Hewitt, said that although no-one was expecting a 2.5-point cut in VAT to suddenly encourage people to open their wallets, he did not believe the country's high streets were in "dire straits".

He said: "I don't think anyone is expecting a boom Christmas, but nor do I think it's going to be horrendous. Lots of retailers are reporting they are very healthy and footfall hasn't gone down at all. The problem is, people have been a little more reluctant to spend on big-ticket items."

He said many public-sector workers had the day off yesterday and may have spent it in the shops. And while some jobs had gone in Scotland, and the financial services sector was waiting for the axe to fall, he insisted the country's economy was still relatively resilient.

However, Dougie Adams, an economic adviser to the Ernst & Young Scottish Item Club, said it was far too early to start talking about economic recovery.

"The footfall will not tell us how much people are spending," he said. "The question is how much are people prepared to spend? They might be going to the shops, but instead of buying a present at £20, they are spending £7.

"We shouldn't get too carried away. The problem is that we have got very little hard data on consumer spending."

Tom Elliott, a global strategist with JP Morgan, said short-term attempts by retailers to cut prices before Christmas might not be enough to kick-start the economy. He said the savings made would probably be spent paying off debts, rather than on new purchases. "My gut feeling is that urge to pay off debt is going to absorb any surplus disposable income," he said.

He added that, for all the "fiscal trickery", consumers would be reluctant to spend when they saw friends or relatives joining the dole queue. If you see an empty desk at work, you stop spending and all your friends and relatives stop spending," he said. "It spreads like a cancer … if you see your friend losing their job, you fear for your own."

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