Britain 'throwing away 2bn a year' after scrapping VAT break for tourists, Reeves told

"Research by the Association of International Retail (AIR) and Global Blue shows that spending by non-EU visitors to the UK is stuck at just 75 per cent of pre-pandemic levels since the Conservatives axed the VAT exemption in 2021. By contrast, continental Europe has seen record surges in tourist spending. Visitors' outlays are up 166 per cent in Spain, 159 per cent in France and 137 per cent in Italy compared with pre-Covid levels."

"The report estimates that Britain missed out on around £2bn of spending last year alone, with the steepest falls among high-spending visitors from the Gulf. Shoppers from Saudi Arabia and Kuwait spent 27 per cent less than before the pandemic, while the UK has increasingly had to rely on American tourists, where growth has lagged far behind rival European markets."

"Critics warn the tax change is pushing luxury shopping and related economic benefits overseas. "The UK is shooting itself in the foot. This is economic madness," one retail trade body said. The figures come as some local councils are also piling pressure on visitors with proposals for their own " tourist taxes " - nightly charges on hotel and B&B stays. Cities including Oxford, Liverpool and Bournemouth are weighing up such schemes, while Aberdeen last year became the most expensive place in Europe for visitor levies after Scotland introduced new powers."

Spending by non-EU visitors to the UK remains at 75 per cent of pre-pandemic levels since the VAT exemption was axed in 2021. Continental European tourist spending has surged, with visitor outlays up 166 per cent in Spain, 159 per cent in France and 137 per cent in Italy versus pre-Covid levels. The UK is estimated to have missed around £2bn of visitor spending last year, with the steepest falls among high-spending Gulf visitors. Shoppers from Saudi Arabia and Kuwait spent 27 per cent less than before the pandemic, while the UK has had to rely more on American tourists whose growth lags rival European markets. Critics say the VAT change pushes luxury shopping and economic benefits overseas, and some local councils are proposing nightly "tourist taxes" on hotel and B&B stays. Cities including Oxford, Liverpool and Bournemouth are considering such levies, while Aberdeen became the most expensive place in Europe for visitor levies after Scotland introduced new powers. Several Scottish councils paused plans after backlash. The retail industry is calling on Rachel Reeves to revive the VAT exemption before the November Budget to boost competitiveness, revive visitor spending and generate billions for the Treasury.

Read at Business Matters