Retailers in London’s West End have already lost millions in unrealised sales this year because of the loss of tax-free shopping for tourists, according to new research.
The tourist tax cost retailers an estimated £220m during the first half of 2024, according to research by New West End Company.
Despite a 3% rise in international visitors to London during the period, spending in the capital’s most popular shopping district saw a sharp decline of 12% compared with the same period in 2019 when tax-free shopping was still in place.
New West End Company said the rising visitor numbers and falling spending had a “significant financial impact”, costing West End retailers £220m in the first half of 2024 and £400m in the previous year.
The research also found that more than half of businesses in the district were said to be reconsidering UK investment as a result.
The report said: “Many retailers in the West End – particularly luxury retailers – compete for an international consumer base. These consumers are highly mobile and savvy and compare the fiscal incentives on offer in different jurisdictions before making decisions about where to make their purchases.
“The removal of tax-free shopping incentives for all travellers in 2021, when the UK left the EU, has acted as a powerful disincentive to tourists who might come to shop in the UK, and a drag on future investment in the UK; research from the Centre for Economics and Business Research suggests that, in 2023, visitor numbers could have been 2 million higher, with a GDP boost of £11.1bn if the policy had been in place.
“Already, we are seeing a significant change in visitor behaviour – tax-free refunds in continental Europe have surged by 36% in the first half of 2024 compared with the same period in 2019, while UK businesses remain at a disadvantage. There is, therefore, a huge opportunity to re-level the playing field and unlock additional growth in the UK.
“Reinstating the policy would make us desirable, once again, to international shoppers who have pivoted to the continent, while simultaneously giving us access to a net new market of 450 million EU residents who could shop in the UK tax-free for the first time.”
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