Personal experience and brutal statistics back up Burberry boss's warning on international shoppers: Rashmi Dubé
Why? It is simple. They love to shop and the removal of the tax-free shopping for international visitors in the UK is having a noticeable impact on the economy. In simplistic terms of course it affects retail and tourism but there is a greater ecosystem at play here.
The end of tax-free shopping was brought in just after Brexit at the start of 2021. Prior to the change, non-EU visitors were able to claim back the VAT they paid on goods purchased in the UK and taken out of the country. The incentive has been withdrawn for just over two years and I directly am feeling the impact.
Predictably, retailers have reported a decline in sales and footfall, and many have been forced to cut jobs and close stores. We are no longer just losing to other destinations, but we have very much lost our pole position as a top destination for high spending tourists . There is also the impact on the tourism sector (a sector in which Yorkshire does well). In a survey conducted by the New West End Company, which represents businesses in London’s West End shopping district, it found that the removal of tax-free shopping for international visitors could cost the UK economy up to £1.4 billion per year and result in the loss of up to 40,000 jobs. Global Blue’s survey found that the number of international visitors to the UK who used tax-free shopping services declined by 78 per cent in the first quarter of 2021 compared to the same period in 2020, when tax-free shopping was still available.
The survey also found that the average spend per transaction by international visitors declined by 7 per cent, indicating that the removal of tax-free shopping had a negative impact on spending. They claim the economic loss to be as much as €2.6 billion.
These surveys indicate that the removal of tax-free shopping has had a significant impact on the UK economy, particularly on the retail and tourism sectors, and that the loss of this incentive has resulted in a decline in spending and footfall. At the end of the day, the UK economy will also lose out on my English pounds, but not by choice and with some resistance. I would very much prefer to encourage our economy but as I am forced to venture out of the country to meet friends as they avoid the UK, how else can I attract them? I am not sure our rich history and heritage will be enough.
I am of course hoping that I can still convince a few tourists to visit “God’s Own County” without the benefit of tax-free shopping. I am trying to focus on the positives as not all is lost. We still have the arts such as exhibitions, and West End theatre still is a draw but how many will venture to the North? We are lucky in Yorkshire. We have the draw of the Victoria Quarter, the Hepworth, all things Bronte and not to mention the amazing countryside - but will footfall drop over a longer period of time?
We have possibly missed a greater opportunity to attract tourists far and wide to help boost our economy further with the upcoming coronation. I just hope we don’t see luxury brands removing themselves from outlets around the UK - causing a ripple effect no one wants to see.
Rashmi Dubé is a partner at gunnercooke