New spending figures from The New West End Company have highlighted the damage caused by the removal of tax-free shopping on the retail sector’s competitiveness.
Retailers have been struggling to profit from the post-Covid travel boom as tourists turn to European cities like Paris, Madrid and Milan to shop instead.
Visitors from the United States and the Gulf region have cut their spending in London’s West End by 1% and 17%, respectively, in the three months to June compared to the same period in 2019, according to its latest research.
The drop comes despite flight bookings from the areas rocketing 17% and 7% against the second quarter of 2019.
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Spending by American tourists has skyrocketed 183% in France and 174% in Spain during the same period, while visitors from the Gulf are spending 118% more in France and 112% in Italy.
The UK scrapped tax-free shopping for international visitors in 2020 under Brexit, which has since faced backlash from several key business leaders including Harrods boss Michael Ward and Harvey Nichols chief executive Manju Malhotra over the negative effects the tourist tax has had on the industry.
The New West End Company estimates the absence of tax-free shopping could increase Treasury receipts by at least £350m, The Times reported.
Chief executive Dee Corsi said the latest figures “should set alarm bells ringing in Westminster”.
The boss of Jigsaw Beth Butterwick said Britain was now the “black sheep” of Europe, with London being left behind from its European counterparts.
Harrods’ Ward revealed earlier this month the luxury department store was forced to “reshape the whole of the price architecture” in its airport stores because of a drop in tourist spending.
Watches of Switzerland’s first quarter sales dipped 8%, which chief executive Brian Duffy attributed to the impacts of tourist tax.
“I was in Italy this weekend and the amount of American tourists that were shopping was very visible and the UK is not getting anywhere near its fair share of that,” he told the Evening Standard. “The UK is missing out…it’s an opportunity for growth.”
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