Retailers, luxury beauty and fashion brands say Trump’s tariffs have badly hit business, forcing some companies to drastically reduce orders, or cut them altogether as they retreat from the critically important US market. Others say they face huge pressure from US buyers to cut prices.
In a letter to Chancellor Rachel Reeves, they say a tax-free shopping scheme for international visitors would pay for itself, with every £1 spent by high-value visitors an additional £8 flows into the wider economy, benefitting retail, hospitality, and leisure, and creating employment opportunities and boosting economic growth across the country.
The letter adds: “However, since the UK no longer offers tax-free shopping for tourists, many are going to cities such as Paris and Milan, where tax rebate schemes remain in place.
“It would boost growth and economic opportunity for the businesses we represent, encourage visitors to the UK, help support many more sectors, and partially mitigate the impact of tariffs by boosting domestic sales when international returns are falling.”
“To say that every additional pound counts for many businesses at present is not an understatement.
The disruption caused by Donald Trump’s tariffs has forced businesses to make a fresh appeal for the return of tax-free shopping for tourists (Photo: Kent Nishimura/Reuters)Helen Dickinson, chief executive at the British Retail Consortium, said: “The Government must end the UK’s uncompetitive position as the only European destination without tax-free shopping.
The plea comes as a new report highlights the “Brexit effect” on the UK’s luxury goods industry, which supports more than 450,000 jobs and contributes £14.6bn to the Treasury.
It found that fashion and accessories firms have suffered more with sales 64 per cent lower, while companies specialising in interior design, home and craftsmanship saw sales down 50 per cent over the period.
At the same time, it found that exports to markets outside the EU have nearly returned to pre-pandemic levels.
“To achieve this ambition, we cannot afford to have one arm tied behind our back. Strong links and favourable trading with Europe remain essential to reaching this forecast, alongside our success in other global markets, and key to supporting craft-led and high-value manufacturing in the UK,” she added.
It found that several British luxury brands have established fulfilment centres and commercial entities within the EU to mitigate such problems, diverting investment that could otherwise have boosted UK growth.
A Treasury spokesman said: “We have no plans to introduce a new tax-free shopping scheme in Great Britain. Visitors can continue to claim VAT relief where the items purchased are shipped directly to their home country as exports.”
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