“Britain’s £2 Billion Loss: The Impact of Ending VAT Relief for Tourists, Says Reeves”

Rachel Reeves faces pressure to reinstate tax-exempt shopping for international tourists after recent data disclosed that Britain is forfeiting billions of pounds annually to competing locations.

A study by the Association of International Retail (AIR) and Global Blue indicates that expenditures by non-EU travelers in the UK have remained at merely 75 percent of pre-pandemic figures since the Conservatives eliminated the VAT exemption in 2021.

In contrast, continental Europe has experienced unprecedented increases in tourist expenditures. Spending is up 166 percent in Spain, 159 percent in France, and 137 percent in Italy compared to pre-Covid figures.

The report suggests that Britain lost approximately £2bn in spending last year alone, with the most significant declines among high-spending tourists from the Gulf. Shoppers from Saudi Arabia and Kuwait spent 27 percent less than they did prior to the pandemic, while the UK has increasingly depended on American tourists, where growth has lagged significantly behind competing European markets.

Critics caution that the tax alteration is steering luxury shopping and associated economic advantages abroad. “The UK is harming itself. This is economic insanity,” remarked a retail trade organization.

The statistics arrive as some local councils are also exerting pressure on tourists with proposals for their own “tourist levies” – nightly fees on hotel and B&B accommodations. Cities such as Oxford, Liverpool, and Bournemouth are contemplating these plans, while Aberdeen last year became the priciest city in Europe for visitor taxes after Scotland granted new powers.

Several Scottish councils have since halted their initiatives due to public backlash, with critics contending that these measures could deter the very tourists that the UK economy requires.

The retail sector is now amplifying appeals for Reeves to reinstate the VAT exemption before her November Budget, asserting that reinstating this benefit could enhance competitiveness, revive visitor spending, and yield billions for the Treasury.