A leading travel industry boss has slammed the axeing of VAT-free shopping for foreign tourists as “a disaster for London”.
The “pitiful decision” was one of a slew of U-turns announced on Monday by new Chancellor Jeremy Hunt to put the public finances back on an even keel and reassure the markets.
But it was met with dismay in the tourism and retail sectors which only a month ago had been celebrating the return of the £2-billion-a-year perk — which makes shopping 20 per cent cheaper for overseas visitors — in Kwasi Kwarteng’s disastrous mini-Budget.
It had previously fallen victim in January last year to yet another Tory occupant of 11 Downing Street, Rishi Sunak, who had seen it as too “London-centric”.
On Tuesday, Tom Jenkins, chief executive of European travel trade body ETOA, said: “It is an own goal. From a UK point of view it is a major incentive for Chinese and US travellers to do their shopping in Paris and Milan rather than London.
“It definitely offsets the benefit of any currency variation. The previous decision by the ex-Chancellor was very much a declaration that the UK is open for business for people to come and spend their money. That door is now closed. It is a straightforward disaster for London.”
Paul Barnes, chief executive of the Association of International Retail, said: “The decision to reverse plans to reintroduce VAT-free shopping for international visitors will come as a hammer blow to UK tourism and the British high street.
“This short-sighted move is based on inaccurate and incomplete projections, and risks putting a brake on the return of international visitors who are vital drivers of economic growth throughout the UK.
“We urge the Chancellor to pause, reflect and commit to a full cost-benefit assessment before deciding on the future of tax-free shopping, which we know is a key motivator for international tourists when choosing where to visit. Ministers must base their decision on the full picture, including the significant economic benefit that international visitors bring to the UK, which this decision puts at risk.”
Helen Brocklebank, CEO of the luxury brands trade body Walpole, said: “The scheme could deliver predicted direct retail sales of at least £1.2 billion and wider associated spend across tourism and hospitality, the positive impact on jobs and prosperity of which would be felt in every part of the UK.
“With our members, Walpole will work closely with the new Chancellor, first and foremost to try to secure a review of the true benefits this scheme might bring.”
