US tourists shunning London for EU, says Burberry
WEALTHY tourists are shunning London for Paris and Milan, Burberry has warned, after ministers scrapped Vat-free shopping for overseas visitors.
The British fashion house said sales had been bolstered by American tourists taking advantage of the stronger dollar by spending in Europe, but that it was now seeing that “those tourists are coming to other European cities like Milan and Paris” instead of London.
Julie Brown, finance chief, said: “The UK is performing well, but we are now finding tourists are tending to go more to continental Europe, and that also has knock-on implications for other industries including hospitality and hotels.”
The comments come after the Government flip-flopped on the scheme
‘Tax-free shopping was a real incentive for the luxury shopper to come to the UK’
that allowed tourists outside the EU to reclaim VAT on their purchases in the UK. Kwasi Kwarteng, chancellor at the time, was considering reintroducing the scheme, but the plans were torn up in the mini-budget bonfire.
Ms Brown said: “Tax-free shopping was a real incentive for the luxury shopper to come to the UK.”
The Treasury suggested that scrapping Vat-free shopping for tourists would bring in about £7bn in tax revenues over the next six years. However, retail groups claimed the estimates were “simply wrong”. They suggested reintroducing the measure would raise an extra £350m in tax revenues a year, because it would mean visitors spending more in hotels and restaurants.
Burberry revealed the boom in US tourists spending in Europe helped propel revenues 11pc higher to £1.3bn in the first half of its financial year to Oct 1, and unveiled plans to return the company to its “Britishness”. Burberry is in the middle of a revamp under Jonathan Akeroyd, its new chief executive, and Daniel Lee, creative director, who is to present his first collection in February.