West End business leaders today hailed the return of VAT-free shopping for overseas visitors as “a huge win” for London.
Kwasi Kwarteng told MPs today that he would reverse the removal of the benefit that had made shopping in the capital 20 percent cheaper for foreign tourists.
It was scrapped by former Foreign Minister Rishi Sunak early last year in part because the Treasury said it was a tax handout benefiting only London.
But critics said it would drive tourists to rival hubs like Paris and Milan, where they can still claim VAT back.
But in his statement today, Mr Kwarteng said: “Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centers to feel the economic benefit. So we have decided to introduce VAT-free shopping for foreign visitors.
“We will replace the old paper-based system with a modern, digital one. And this will be in place as soon as possible. This is a priority for our big UK retailers, so it’s our priority too.”
The move, which, combined with the falling value of the pound, will make London a much cheaper shopping destination, was met with enthusiasm.
Dee Corsi, Interim CEO of the New West End Company business group, said: “Today’s decision to reintroduce duty-free shopping for overseas visitors is a huge victory for London International Centres.
“Now the West End can compete on equal terms with Paris, Milan and Madrid as one of the world’s leading shopping and entertainment destinations.
“In 2019, international visitors contributed more than £28 billion to the UK economy. The government’s announcement is great news and with exciting new brands expected across the West End following today’s announcement that newly opened businesses will not be subject to business fees, we are confident we can top this figure in the next few years. next years”.
Linda Ellett, director of UK consumer, retail and leisure markets at consultancy KPMG, said: “The return of VAT-free shopping for tourists increases London’s competitiveness when it comes to attracting the purchasing power of tourists. international visitors.
“This is even more key as we look for ways to generate economic growth, return international tourism to pre-pandemic volumes, and resist rising high street inflation.”
Thierry Andretta, CEO of luxury goods brand Mulberry, said: “This decision will restore London and the UK’s other major cities to their rightful place among the world’s leading luxury shopping destinations, as well as providing an invaluable support to the UK hospitality sector.”
Paul Barnes, chief executive of the International Retailers Association, said: “The reintroduction of duty-free shopping will give retailers across the country a much-needed boost in trade as international shoppers return to the UK. It allows us to compete on a level playing field with our European neighbors in attracting high-spending international visitors to our stores, hotels and restaurants.
“Today’s news brings with it a huge new tourism market of over 440 million people from the EU, now that Britain is the only country in Europe where EU visitors can shop duty free, which will mean a great stimulus for our retail business. hospitality and tourism sectors across the country, with regional airports set to benefit from an increase in their visitor economies.
“This is a very good move by the Government, and it is poised to deliver quick results as international visitors return in force across the country.”