UK luxury brands urge Government to reintroduce tax-free shopping, smoother tourist visa scheme

British luxury trade body Walpole has called on the UK government to reintroduce tax-free shopping in order to boost the British economy by at least £1.2 billion in its latest report.

The report, titled What It’s Worth: Enabling the Return of the £30bn High-end Tourism Sector, also outlined the role that tourism played in Britain’s economy pre-pandemic, where both domestic and international tourism, contributed to 4% of GDP and had an overall value of £85 billion.

£30 billion of this was attributed to ‘high end tourism’ – defined as those who stay in luxury accommodation including five-star hotels. These high-end visitors typically spend 14 times more than the average visitor, amounting to around £30 billion in economic value.

£1 spent by those staying in high-end accommodation in the UK generates £8 of value in other industries, such as culture, entertainment and luxury shopping, which in turn supports the 160,000 jobs across the UK luxury sector.

Since Brexit and the pandemic, Britain has lost its position as the favoured destination for high spending international tourists – largely due to the government decision to abolish tax-free shopping (the VAT Retail Export Scheme) in 2020, making Britain the only European country not to offer tax-free shopping to non-EU tourists.

The report added that this has resulted in a significant shift for international visitors, who are heading to France, Italy and other EU destinations over the UK and is already reflected in the UK’s international visitor retail spend post-Covid.

Spending on shopping by visitors from Gulf Cooperation Council (GCC)in the EU in Q4 2021 was at 153% of Q4 2019 levels. In the same period GCC spending on shopping the UK was at just 60% of 2019 levels.

The UK’s Electronic Visa Waiver Scheme for incoming tourists has also made the UK a destination which is less easily accessible compared to EU countries.

In addition to tax free shopping, the British trade body, which include 250 brands such as Penhaligon's, Jo Malone London and Molton Brown recommends other initiatives to attract high end tourism and subsequent economic growth, including a wider international Electronic Visa waiver scheme and extended Sunday trading hours in the West End and Knightsbridge.

Walpole CEO Helen Brocklebank said: “To say that it has been a challenging few years for the UK tourism industry would be an understatement, however we are now in a position where the UK can open its doors to the world and welcome back international tourists – especially those high-end tourists who are looking to spend in ourluxury hotels, restaurants, shops and cultural venues up and down the country, all the while aiding economic growth and job creation.

"By doing this, we can work together to make the UK the destination of choice for those looking to travel post-Covid and fuel the UK’s long-term recovery."