What: The U.K. retail industry is disappointed in the reversal of a tax-free government policy that will affect tourists’ shopping behaviours in the country and cost the sector USD1.36 billion.

Why it is important: The decision leaves the UK as one of the only European countries not to provide a tax-free shopping scheme to encourage tourism.

The tax-free scheme would have enabled overseas tourists to get a refund on the VAT paid on goods bought on the high street or in malls, at airports and other departure points, and exported from the U.K. in their personal baggage.

The policy would have delivered growth to accelerate post-pandemic recovery, and a significant boost to UK manufacturing as it forms part of the ecosystem of the sector and supports jobs across the country.

Tourists may now prefer to shop in other cities like Paris, Madrid or Milan instead of London because they can receive the return of the VAT; the policy would have helped to strengthen the UK’s position as a top destination for international shoppers. As well as other cities gaining GBP5 million a week from high-earning British spenders who can make cheaper purchases on the continent.

Walpole, a company which represent the UK luxury industry, said this is their immediate priority, they are asking the government to do a full economic review and will work closely with the new Chancellor to reach an outcome which supports the sector and the countless jobs and industries it supports.

Policy reversal slams hammer on UK tourism and British high street- Source 1

Policy reversal slams hammer on UK tourism and British high street- Source 2