West End spending slows as tax hits tourists

LONDON’S West End has been hit by a spending slowdown as the Government’s tourist tax weighs on demand.

The shopping district was busier over November and December compared to last year, according to the New West End Company, with footfall up 3pc year on year and 5pc in December. But spending slipped 1pc as more shoppers opted against buying in stores.

The New West End Company blamed the dip on cost of living pressures and the lack of Vat-free shopping. Dee Corsi, chief executive of the company, said it was “imperative” that visitors are incentivised to spend in the UK, as she warned the tourist tax was a deterrent.

It comes as the Treasury is considering whether to reintroduce tax-free shopping for tourists. Rishi Sunak axed the policy as Chancellor following Brexit, although Jeremy Hunt has vowed to look again at the scheme ahead of the spring Budget.

It follows warnings from luxury giants which said London is losing out to Europe cities like Paris and Milan.

Mulberry, which last year closed its flagship Bond Street store, last week blamed the tourist tax for helping to drive revenues down by 8.4pc in the 13 weeks to the end of December.

Watches of Switzerland – Britain’s biggest Rolex seller – said luxury demand was unlikely to improve this year. Burberry has also recently issued a profit warning.

Luxury companies caution that it is not only foreign shoppers who are cutting back, as they claim British customers are heading abroad to buy designer brands. UK shoppers can claim back VAT on shopping in the EU.

Ms Corsi said: “Reintroducing tax-free shopping offers the unique opportunity to boost spend from existing tourists, and simultaneously create a new visitor economy of 450m EU residents.”