West End loses £640m due to axing of tax-free shopping

The West End lost £640m last year due to the lack of tax-free shopping, rising from £400m in 2023.

The Central London district saw subdued growth of 0.25% year on year over November and December, New West End Company (NWEC) reported.

The business management consultant insisted spend from international shoppers had remained significantly muted amid continued pressure on domestic spend.

It argued the policy environment needed to evolve quickly to support business stability and growth.

Domestic spend dropped 2.2% in November and December, under a wider trend of lower consumer confidence. International spend was up 3.5% over the period, with visitors from the US, Saudi Arabia and Germany emerging as the top international shoppers.

With international spend remaining below pre-pandemic levels, the company said the UK’s removal of tax-free shopping and lack of a robust tourism strategy had put London at a disadvantage compared to other key European cities.

Data from credit card firm Global Blue found that issued sales in continental Europe, where tourists have a 20% savings on purchases, were up 16% in November and 20% in December.

NWEC CEO Dee Corsi said: “Our latest data reaffirms the West End’s status as a world-class destination for retail, leisure and hospitality particularly during the festive period.

“However, challenging economic headwinds and policy inertia are holding us back. International visitors are eager to spend, at a time when domestic spend is declining, but without a robust tourism strategy, we are losing out to our European competitors – to the tune of £640 million in a year.”

She added: “We need bold action to unlock the full potential of international spend, if we are to recover to pre-pandemic levels and achieve growth.”

New West End Company has previously spoken out against the scrapping of tax-free shopping, with the business highlighting the damage caused by the removal of the scheme in 2023.

It pointed out that retailers had been struggling to profit from the post-Covid travel boom as tourists turned to European cities like Paris, Madrid and Milan to shop instead.

In September, Kurt Geiger CEO Neil Clifford warned the loss of tax-free shopping for tourists was having a “massively negative effect” on UK spending.

Tax-free shopping was scrapped at the end of 2020, as part of the government’s Brexit plans.

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