Retailers in London’s West End have faced significant financial challenges due to the removal of tax-free shopping for tourists.
- International visitor numbers increased by 3% in early 2024, yet spending in the West End decreased by nearly 12% compared to 2019.
- The abolition of VAT-free shopping is identified as a primary factor in the reduced spending.
- Continental Europe’s tax-free refunds have surged by 36%, attracting international shoppers away from the UK.
- Calls have been made to reinstate tax-free shopping to restore the UK’s competitive advantage.
The removal of tax-free shopping for tourists has significantly impacted London’s West End retailers, resulting in a loss of £220 million in unrealized sales in the first half of 2024 alone. Despite a 3% increase in international visitors, spending in the West End has declined by nearly 12% compared to the same period in 2019. This indicates a stark contrast between visitor numbers and actual expenditure.
The New West End Company, which represents over 600 businesses across key locations such as Oxford Street, Bond Street, Regent Street, and Mayfair, points to the abolition of VAT-free shopping as a primary factor driving this decline. This policy change has not only affected retail but has also had a knock-on effect on the wider tourism ecosystem, impacting restaurants, hotels, and cultural attractions.
Research shows that the tax-free refund system has been more appealing in Continental Europe, where refunds have increased by 36% in the first half of 2024 compared to 2019. This has led international shoppers to favor European destinations, thereby diverting potential footfall from the UK.
Dee Corsi, CEO of the New West End Company, emphasizes the need for policy reform in the upcoming Budget. Describing it as a critical moment for the new government’s business strategy, she advocates for a comprehensive plan that includes reinstating tax-free shopping as part of broader economic growth initiatives. Corsi argues that this could revive the UK’s position as a desirable destination for international shopping, encouraging economic recovery and competitiveness.
Reinstating tax-free shopping is deemed essential to restoring the UK’s retail competitiveness and economic growth.
