London’s stores count cost of ‘tourist tax’

In the first half of 2024, retailers in the West End of London experienced a significant financial setback, with losses amounting to £220 million in unrealised sales. This downturn follows the elimination of tax-free shopping for international visitors, a decision made by the previous Conservative government under Chancellor Jeremy Hunt. The aim of this policy change was to address the UK’s public finances, but it has had adverse effects on the retail sector. Despite an increase in the number of international tourists visiting London, the New West End Company has reported that retailers are projected to face even greater losses this year than the estimated £400 million in unrealised sales recorded in 2023. This trend highlights the ongoing challenges faced by the retail industry in the capital. The removal of tax exemptions for overseas shoppers has placed British retailers at a competitive disadvantage compared to their European counterparts, who continue to benefit from similar tax-free shopping policies. The retail industry has been vocal in its calls for the reinstatement of these tax exemptions, arguing that it is essential for the recovery and growth of the sector. As the financial impact of the scrapped tax-free shopping continues to unfold, the future of retail in London remains uncertain. The industry’s plea for policy changes reflects a broader concern about the sustainability of retail businesses in a post-pandemic economy, where attracting international visitors is crucial for economic recovery.