The figures highlight how UK shoppers are taking advantage of the EU’s VAT rebate scheme for tourists, introduced for British visitors in 2021 after Brexit. Last year, Britons spent £742 million on tax-free shopping in the EU – up from £527 million in 2022 – with analysts saying the savings outweigh the cost of Eurostar tickets or budget flights.
AIR chairman Derrick Hardman said the trend shows “a new market in shopping-led tourism has emerged”, adding: “It’s sad to see British shoppers taking their business elsewhere.”
The data will intensify calls for Labour to reinstate the UK’s own VAT-free shopping scheme for overseas visitors, scrapped in 2021 by the previous government. Culture Secretary Lisa Nandy has indicated the policy could be reconsidered.
Campaigners argue the decision costs the UK around two million international visitors a year and deters spending in British stores, particularly on luxury brands. Burberry and Harrods are among the companies warning that the policy disadvantages domestic producers, as shoppers are more likely to buy home-grown goods in countries offering rebates.
Hardman said: “It makes no sense for the UK to remain the only destination in Europe not offering tax-free shopping. Thanks to our position outside the EU, we now have a unique chance to reverse the policy and become the world’s shopping capital – offering tax rebates for both EU and non-EU shoppers.”
AIR estimates that reinstating VAT rebates for EU visitors alone could add £3.65 billion to the UK economy annually, generating more than £500 million in additional VAT revenue for the Treasury.
Sir Rocco Forte, chairman of Rocco Forte Hotels, said the policy shift has changed travel patterns: “Foreign visitors who used to stay in the UK and leave laden with parcels are increasingly cutting trips short and spending more time in Europe, where they can still shop tax-free.”
A Treasury spokesman said the UK remains one of the most visited countries in the world, with a new National Visitor Economy Strategy due this autumn aimed at attracting 50 million international visitors annually by 2030.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
