Department stores and luxury shops have enjoyed bumper takings from overseas visitors snapping up watches and jewellery since the Brexit vote. The tourists were attracted to UK high streets by a sharp fall in the pound following the Brexit vote. The sharp move means tourists can now get more pounds for their own currency.
With the pound still well below its pre-referendum level, the twice-yearly golden week holiday in China, which began on Saturday, is expected to bring in more tourists.
The tax-free shopping company Global Blue said any boost from golden week would build on a strong August for tourist spending in the UK. It reported a 37 per cent year-on-year surge in UK international tax-free shopping in August.
“The weakened pound has continued to work in retailers’ favour as international visitors have made plans to travel to enjoy the UK’s warmer weather and take home with them British luxury items due to the improved exchange rate,” said the company’s UK and Ireland managing director, Gordon Clark.
“The UK is outperforming the rest of Europe and very much remains a key destination on Chinese travellers’ itineraries and we anticipate September and October tourist spend to follow August’s surge.”
Clark pointed to reports that the online travel agency Ctrip had enjoyed strong demand in the Chinese market for trips to Britain during golden week.
“According to Ctrip, a trip to the UK is now about 20 per cent cheaper than it was this time last year, and more than half of Ctrip’s routes to the UK were booked up one month ahead of golden week,” said Clark.
Westfield, which owns two London shopping centres, is expecting busy tourist trade with Chinese shoppers visiting during the 1-7 October holiday. That optimism follows a successful summer period when record Ramadan sales helped drive a 70 per cent increase in international spending at Westfield compared with a year earlier.
Westfield said its retailers were reporting that Chinese tourists were bulk-buying designer items to make the most of the weak pound. Louis Vuitton, Gucci and Burberry were seeing strong custom from China, with handbags and accessories the most popular items.
At Westfield’s west London centre, spending by Chinese visitors was up 53 per cent on the previous year in August. The average spend per Chinese shopper was up 35 per cent on the year.
Official figures have also shown spending by visitors to the UK rose after the referendum. Tourists’ spending picked up in July, while British holidaymakers’ cut their outgoings overseas as the weak pound made foreign holidays more expensive.
Currency experts expect the pound to remain relatively weak for some time amid uncertainty over the UK’s future trading relationships, and as the Bank of England hints at another interest rate cut on top of August’s move to a record low in official borrowing costs of 0.25 per cent. The Prime Minister Theresa’s May’s announcement on sunday that she will trigger article 50 by the end of March 2017 may also further weaken sterling.
This weekend marked 100 days since the vote to leave the EU. While the pound has stabilised following an initial tumble, it is still down more than 10% against the US dollar, China’s yuan and the euro.
Jake Trask, currency analyst at currency exchange company UKForex, believes there is little prospect of a recovery for the pound for now. “In the next hundred days, the pound is unlikely to reach anything like its pre-Brexit value, despite more positive economic data emerging from the UK in recent weeks. In fact, a move downwards looks much more likely,” he said.