Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

London fears losing luxury shoppers to Paris and Milan

London fears losing luxury shoppers to Paris and Milan

London's luxury retailers fear the city is losing its pull as a shopping destination, with tourists from the United States, China and the Gulf flocking instead to Paris and Milan where tax breaks still offer a way to cut the cost of their purchases.

With finance minister Jeremy Hunt set to present the government's budget statement on Wednesday, the industry wants him to reinstate sales-tax-free shopping for overseas visitors, which ended in 2020 when Britain left the European Union.

Big names including department stores Harrods and Harvey Nichols, Chelsea property manager Cadogan and The Lanesborough Hotel have joined forces with hundreds of retailers to urge Hunt to change the rules.

"We've heard from some brands that they're prioritising Paris for investment in stores," Steve Medway, CEO of the Knightsbridge and King's Road Partnerships, told Reuters in an interview at Harrods, before it opened for the day.

"They're seeing the sales."

Medway noted that international visitors contribute 28.4 billion pounds ($34.5 billion) to UK GDP annually, of which Knightsbridge and the King's Road are a substantial part.

Data from international tax refund company Global Blue shows that while spending by U.S. visitors to Britain has recovered to 2019 pre-pandemic levels, their spending in France, Spain and Italy has shot ahead.

To compound the problem, British shoppers are themselves starting to spend more in the European Union, where they can also reclaim the value-added tax (VAT) charged on goods.

Now, amid signs that some luxury brands are investing more in their French stores on the Champs Elysees than in their London outlets, industry executives say the tax incentive should be restored to keep Britain competitive.

They argue that its continued lack will have an impact on the whole tourism ecosystem, including hotels, restaurants, taxis, museums and theatres.

The government says tourists can still enjoy UK tax-free shopping if they ship goods directly to an overseas address, and that it scrapped VAT-free shopping to raise revenue and after an assessment found it would not have a large impact on tourism.


OWN GOAL


Burberry BRBY.L, Britain's biggest luxury retail brand, warned last year that London was losing out to other European cities over the VAT rule. Handbag maker Mulberry (MUL.L) cited the axing of VAT-free shopping as a major factor behind the closure of its Bond Street store last month.

Sarah Jaconelli, director of communications for the New West End Company which represents 600 businesses, said Britain had scored a massive own goal: "You can go to Europe and get a 20% discount, why wouldn't you?"

The Global Blue data is stark. It shows spending by American visitors to the UK was back to 101% of 2019 levels in 2022, but that France and Italy achieved over twice those levels at 256% and 226% respectively.

For visitors from Gulf states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - UK sales were only back to 65% of 2019 levels. France meanwhile was at 198% relative to 2019, Italy 166% and Spain 158%.

More worrying for the future, a Global Blue survey of 10,000 Chinese who visited Europe in 2019 found that Britain was also dropping in appeal.

While it was the second most popular destination behind France among large European countries in 2019, the survey showed only 42% were now planning to visit Britain, down from 70% in 2019, with Spain, Italy and Germany also now more popular.

"The Chinese will be the most critical demographic to watch because they've always been the most price-sensitive," said Medway, whose partnership represents hundreds of businesses in the luxury shopping districts.

"That's why tax-free was so important for them, and now we are the only country in Europe that doesn't offer it."

Harrods managing director Michael Ward said if no action was taken, the impact would be seen far beyond the stores, with hotels and restaurants in London already noting the absence of international shoppers.

Cadogan, the main landlord in the west London districts of Chelsea and Knightsbridge, whose estate spans over 90 acres, also called on the government to act.

"At a time when we should focus on incentivising international travel, we are now at a distinct and unnecessary disadvantage to our neighbouring EU cities," Chief Executive Hugh Seaborn said.

Chinese resident Hang Hen, 22, and a friend were shopping on New Bond Street on Tuesday morning. He said he had not considered the VAT issue before, because he was generally spending his parents' money.

"Maybe I'll keep much more money to go to France?" he said.

($1 = 0.8228 pounds)

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
×