Recent research reveals significant financial impact on West End retailers due to the absence of tax-free shopping for tourists.
- International visitor numbers to London increased by 3% in early 2024, yet spending fell by nearly 12% compared to 2019.
- The tax-free shopping removal is identified as a major reason for declining retail revenues, affecting broader tourism sectors.
- Continental Europe’s tax-free refunds surged by 36% in contrast to the UK’s situation, indicating a shift in tourist preferences.
- Calls for policy changes, including tax-free shopping reinstatement, emerge from industry leaders as the UK budget approaches.
In the first half of 2024, research indicates that retailers in London’s West End suffered a £220 million decrease in potential sales due to the removal of tax-free shopping for tourists. Despite a 3% rise in international visitors to London during this period, spending in the region dropped by nearly 12% compared to the same timeframe in 2019, when tax-free shopping was available.
The New West End Company, representing significant commercial interests across Oxford Street, Bond Street, Regent Street, and Mayfair, attributes the drop in spending to the cessation of tax-free shopping incentives. This change has not only impacted retail sales but also had a ‘knock-on effect’ on other areas of the tourism ecosystem, including hospitality and cultural attractions, thus compounding the economic impact.
In contrast to the UK, continental Europe has experienced a 36% increase in tax-free refunds in the first half of 2024 compared to the same period in 2019. This trend suggests that international shoppers, previously drawn to the UK by tax-free incentives, are now redirecting their spending towards European destinations offering more favourable tax conditions.
Dee Corsi, the CEO of the New West End Company, voiced the need for strategic policy reforms as the UK approaches its upcoming Budget on 30 October. Corsi urges for a comprehensive approach to economic growth, which includes tackling high business rates, encouraging innovation through planning reform, enhancing public safety by revising police funding, and crucially, reinstating tax-free shopping to restore the UK’s appeal to international shoppers.
As the UK government prepares for its Budget, the call to revisit and potentially reinstate tax-free shopping represents a critical factor that could help regain competitive advantage in the global tourism and shopping market.
The UK’s retail sector faces significant challenges, highlighting the urgent need for strategic policy re-evaluation to enhance financial recovery.
