New research reveals significant financial losses for West End retailers due to the absence of tax-free shopping for tourists.
- The UK’s West End experienced a notable 12% decrease in tourist spending despite a rise in international visitors by 3% for 2024.
- Comparative analysis shows tax-free refunds in Continental Europe saw a 36% increase, suggesting a shift in tourist shopping patterns.
- The New West End Company attributes the removal of tax-free shopping incentives as a major influence on decreased tourist spending.
- The upcoming Budget offers an opportunity to address these challenges and revitalise the UK’s competitive edge in tourism.
Research indicates a concerning financial impact on West End retailers, amounting to £220 million in the initial half of 2024 and an estimated £400 million for the entire year, following the removal of tax-free shopping for tourists. This policy shift has notably affected the spending behaviour of international visitors.
Despite a 3% increase in international visitors to London, the West End experienced a significant 12% decline in spending compared to the same period in 2019, when VAT-free shopping was in place. This indicates a clear correlation between tax policy and spending behaviour among tourists.
Continental Europe registered a 36% rise in tax-free refunds in the first half of 2024, highlighting a possible redirection of tourist shopping towards regions with favourable tax policies. Such trends suggest that the lack of tax incentives in the UK may deter international shoppers from spending in the West End.
The removal of tax-free shopping is identified as a ‘key driver’ of reduced tourist expenditure, impacting not just retail but also the wider tourism ecosystem, including hospitality and cultural sectors.
The New West End Company’s CEO, Dee Corsi, emphasised the importance of Labour’s upcoming Budget to address these issues, advocating for tax-free shopping reinstatement as a strategy to enhance the UK’s appeal to international consumers and restore economic vitality.
Dee Corsi stated, “The upcoming Budget is Labour’s first chance to deliver on its election promises and prove it is the party of business. [We are calling] for a long-term approach to injecting growth back into the economy. This will mean tackling unwieldy business rates, encouraging innovation by reforming the rigid planning system, keeping streets safe by remodelling devolved police funding and reinstating tax-free shopping to restore the UK’s competitive edge.”
The forthcoming Budget presents an opportunity for significant policy adaptations to rejuvenate the UK’s tourism and retail sectors.
