UK high streets fall behind European peers after end to tax-free shopping

By

Nigel TAYLOR

Published
Mar 8, 2022

The UK’s changes to tax-free shopping rules — effectively banning it for many international shoppers — means Britain’s retail destination are losing out to those in Europe, a Global Blue report claims.

The tax-free shopping refund agency said it has data comparing the spending of high-spending international tourist shoppers in the EU in 2019 with levels in 2021. And tax-free shopping spend is now being diverted to European Union destinations.

The figures specifically show that spending in Continental Europe has risen across all three categories of overseas shopper.

Some 20% of those shopping in the EU in 2021 had previously only shopped in the UK in 2019, where they spent an annual average of €24,000 each. But they spent nothing in the UK and €22,000 each in Continental Europe in 2021.

It said 50% of those shopping in the EU in 2021 had previously only shopped in Continental Europe in 2019 and they have increased their average annual spending per person there by 10% (€20,000 in 2019 to €22,000 in 2021).

The remaining 30% of those shopping in the EU in 2021 had previously shopped in both Continental Europe and the UK in 2019, but have specifically increased their average annual spending per person in Continental Europe by 40% (€14,000 in 2019 to €22,000 in 2021).

It’s bad news for UK retail in general and specifically for the luxury, fashion and beauty sectors.

Paul Barnes, Chief Executive of the Association of International Retail (AIR), was due on Tuesday to give evidence at the DCMS Select Committee hearing, emphasising the importance of international tourism — worth £28.4 billion in 2019 — for the survival of the British retail, leisure and hospitality industries. 

He said that “domestic shoppers are returning strongly to the high street, [but] we are seeing a noticeable absence of high-spending international visitors that goes beyond the consequences of the pandemic. The Treasury must look again at its decision to abolish tax-free shopping. We are now giving competing countries such as France and Italy a 20% price advantage over the UK, pushing those that traditionally contribute around £28.4 billion a year to our economy towards Continental Europe”.

Fraser Brown, Retail & Property Director, Heathrow, added: “In this post-Covid world, we are having to compete more fiercely than ever before with our European neighbours who have gone in the opposite direction by making their tax-free shopping schemes more generous to try and entice visitors away from the UK. Now that the world is opening up again, the Government must act to make the UK a more attractive destination to tourists by introducing new incentives to level the playing field.”