‘Lockdown’s a disaster for British luxury but abolishing Tax-Free shopping could be the kiss of death’

And there’s the rub, because ‘some kind of normal’ for British luxury depends on being open and welcome to high spending international visitors. Our 16 million non-EU tourists spend on average £17.8b a year, that’s £1112 each, £14.3billion of which is spent on hotels, restaurants, trips, cultural attractions and so on, […]

And there’s the rub, because ‘some kind of normal’ for British luxury depends on being open and welcome to high spending international visitors. Our 16 million non-EU tourists spend on average £17.8b a year, that’s £1112 each, £14.3billion of which is spent on hotels, restaurants, trips, cultural attractions and so on, and £3.5bn on tax-free shopping, often for iconic British items that will be a souvenir of their trip – a Burberry trenchcoat, a Mulberry handbag, or a Savile Row suit.

Their contribution to the economy at large and to high end brands is significant, and essential to a strong, speedy economic recovery. But even before the latest lockdown dashed hopes of good Christmas sales, the Chancellor had already dealt a devastating blow to luxury’s recovery plans when he announced the abolition of tax- free shopping (VAT RES) at the end of this year.

Tax-free shopping is an important draw for affluent non-EU visitors. It accounts for between 30 and 60% of revenues in luxury stores the length and breadth of the country. We think of luxury’s allure for international visitors being concentrated on London and Bicester Village, but £124m of tax free shopping is spent in the very cities that are crucial to the levelling up agenda – Liverpool, Manchester, Leeds and Birmingham. In Edinburgh alone, tax-free sales are £92m. Strong tax-free sales in every city in the UK secures highly skilled, sustainable jobs in manufacturing hubs in Moray, in Northampton, in Somerset, in Yorkshire and in Stoke. You can see from those numbers how important it is to the sector’s ability to recover.

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