Ahead of the Autumn Budget, which is coming up on the 30 October, West End retailers are urging Labour to reintroduce tax-free shopping. According to new data, in the first half of 2024, there were £220 million in unrealised sales in the West End due to international shoppers taking their business elsewhere where they can claim their tax back.
Back in 2020, when Rishi Sunak was chancellor, he scrapped tax-free shopping for international visitors. Fresh data from New West End Company revealed that the policy change cost West End retailers £400 million in 2023.
The absence of tax-free shopping continues to act as a powerful disincentive for international visitors, who can save up to 20% on purchases made in Continental Europe compared to those made in the UK. This has created a persistent ‘spending gap’ between international visitor numbers and their associated spend.
Despite number of international tourists visiting London rising by 3% in the first half of 2024 versus H1 2019, international visitor spend fell 12%. However, according to Global Blue data, international spend in Continental Europe has skyrocketed since 2019. It was up by 36% in the first half of 2024 compared to the first half of 2019. This reveals the negative impact the removal of tax-free shopping has had on businesses in the UK.
Dee Corsi, Chief Executive of the New West End Company, commented: “It is bittersweet for the West End that, whilst London remains a highly desirable global travel destination, the absence of tax-free shopping continues to act as a drag on overall spending growth.
“As London Fashion Week concludes, in its 40th anniversary year, we are reminded of the incredible craftsmanship and innovation that makes British fashion globally renowned. And yet, the growth of this vital sector is being hindered, and retailers forced to compete at a disadvantage.
“Critically, the loss of £400 million in unrealised sales last year in the West End alone is just a small part of this story; fewer sales on the shop floor means fewer tourists in restaurants and hotels, and a knock-on impact on our entire tourism ecosystem. If the Government is serious about returning the country to growth, tax-free shopping presents a rare, golden opportunity to do so.”