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Hot on the heels of London Fashion Week, our rivals in Paris are wrapping up their own designer showcase.
The battle between the iconic British and French fashion brands has a long history.
Savile Row and our fashion houses are world-famous, as are the boutiques on the Champs-Elysées.
But our fashion industry – and London and the UK in general – is operating at a marked competitive disadvantage.
This is reflected in Mulberry’s decision to close its Bond Street store in London last year.
Showcase: Models pose on the catwalk during London Fashion Week. The British fashion industry (and London and the UK in general) is operating at a marked competitive disadvantage.
It is also underlined by repeated warnings from retailers that the Government’s decision to abolish duty-free purchases of goods for international visitors in 2021 is costing them business.
The ‘tourist tax’ is driving high-spending visitors away from the UK, as they effectively pay around 20 per cent more for the same goods than in countries such as France, Italy, Germany and Spain.
This, in turn, is affecting British brands who employ people across the country across their outlets and supply chain.
Tourists spend disproportionately more money on these brands when visiting London than if they visit another country.
France now accounts for 46 percent of all duty-free sales in Europe, up from 30 percent in 2020.
And figures from tourism shopping tax rebate firm Global Blue show that 10 per cent of international shoppers’ spending in the UK in 2019 has shifted to EU countries, which offer VAT-free shopping.
But it’s not just about a single sector, as important as fashion and retail are.
London and the UK are also missing out on increased visitor spending at hotels, restaurants, museums, theaters and more.
The Center for Economics and Business Research estimates the impact of the tourism tax at a staggering £11.1bn of lost GDP, as well as deterring 2 million travelers from visiting the UK each year.
Chancellor Jeremy Hunt’s welcome decision to order a review of this measure by the Office for Budget Responsibility opens the door to the removal of the tourist tax when it lands in the dispatch box tomorrow.
The Government should use the spring budget to end a move that is driving business into the hands of our rivals.
Doing so would boost our stagnant economy and would more than pay for itself by increasing spending in London and the UK, which in turn would generate a significant net increase in tax revenue annually.
With the UK economy stagnating, we must seize the moment to attract high-spending visitors and maximize the capital’s appeal to overseas tourism.
This is particularly important in the run-up to this year’s Olympic Games, when up to 3 million visitors will flock to Paris.
The Chancellor should reintroduce VAT-free shopping this week to encourage more visitors to cross the Channel and spend here during the summer.
This is also important when it comes to business tourists. Many are increasingly concerned about bureaucracy, associated administrative costs and delays in attending conferences and exhibitions in the UK.
This bureaucracy should be simplified so that these high-spending visitors opt to make purchases here rather than abroad.
It is also important that planned changes requiring more data to be collected at border checkpoints, such as the Eurostar at St Pancras, are implemented in a way that does not cause long delays.
Organizations representing around 1.5 million employees across the country signed a BusinessLDN letter urging the Government to eliminate the tourist tax.
The Chancellor should use the spring budget to demonstrate his commitment to growth by acting now.