London Daily

Focus on the big picture.
Friday, Oct 03, 2025

London fears losing luxury shoppers to Paris and Milan

London fears losing luxury shoppers to Paris and Milan

London's luxury retailers fear the city is losing its pull as a shopping destination, with tourists from the United States, China and the Gulf flocking instead to Paris and Milan where tax breaks still offer a way to cut the cost of their purchases.

With finance minister Jeremy Hunt set to present the government's budget statement on Wednesday, the industry wants him to reinstate sales-tax-free shopping for overseas visitors, which ended in 2020 when Britain left the European Union.

Big names including department stores Harrods and Harvey Nichols, Chelsea property manager Cadogan and The Lanesborough Hotel have joined forces with hundreds of retailers to urge Hunt to change the rules.

"We've heard from some brands that they're prioritising Paris for investment in stores," Steve Medway, CEO of the Knightsbridge and King's Road Partnerships, told Reuters in an interview at Harrods, before it opened for the day.

"They're seeing the sales."

Medway noted that international visitors contribute 28.4 billion pounds ($34.5 billion) to UK GDP annually, of which Knightsbridge and the King's Road are a substantial part.

Data from international tax refund company Global Blue shows that while spending by U.S. visitors to Britain has recovered to 2019 pre-pandemic levels, their spending in France, Spain and Italy has shot ahead.

To compound the problem, British shoppers are themselves starting to spend more in the European Union, where they can also reclaim the value-added tax (VAT) charged on goods.

Now, amid signs that some luxury brands are investing more in their French stores on the Champs Elysees than in their London outlets, industry executives say the tax incentive should be restored to keep Britain competitive.

They argue that its continued lack will have an impact on the whole tourism ecosystem, including hotels, restaurants, taxis, museums and theatres.

The government says tourists can still enjoy UK tax-free shopping if they ship goods directly to an overseas address, and that it scrapped VAT-free shopping to raise revenue and after an assessment found it would not have a large impact on tourism.


OWN GOAL


Burberry BRBY.L, Britain's biggest luxury retail brand, warned last year that London was losing out to other European cities over the VAT rule. Handbag maker Mulberry (MUL.L) cited the axing of VAT-free shopping as a major factor behind the closure of its Bond Street store last month.

Sarah Jaconelli, director of communications for the New West End Company which represents 600 businesses, said Britain had scored a massive own goal: "You can go to Europe and get a 20% discount, why wouldn't you?"

The Global Blue data is stark. It shows spending by American visitors to the UK was back to 101% of 2019 levels in 2022, but that France and Italy achieved over twice those levels at 256% and 226% respectively.

For visitors from Gulf states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - UK sales were only back to 65% of 2019 levels. France meanwhile was at 198% relative to 2019, Italy 166% and Spain 158%.

More worrying for the future, a Global Blue survey of 10,000 Chinese who visited Europe in 2019 found that Britain was also dropping in appeal.

While it was the second most popular destination behind France among large European countries in 2019, the survey showed only 42% were now planning to visit Britain, down from 70% in 2019, with Spain, Italy and Germany also now more popular.

"The Chinese will be the most critical demographic to watch because they've always been the most price-sensitive," said Medway, whose partnership represents hundreds of businesses in the luxury shopping districts.

"That's why tax-free was so important for them, and now we are the only country in Europe that doesn't offer it."

Harrods managing director Michael Ward said if no action was taken, the impact would be seen far beyond the stores, with hotels and restaurants in London already noting the absence of international shoppers.

Cadogan, the main landlord in the west London districts of Chelsea and Knightsbridge, whose estate spans over 90 acres, also called on the government to act.

"At a time when we should focus on incentivising international travel, we are now at a distinct and unnecessary disadvantage to our neighbouring EU cities," Chief Executive Hugh Seaborn said.

Chinese resident Hang Hen, 22, and a friend were shopping on New Bond Street on Tuesday morning. He said he had not considered the VAT issue before, because he was generally spending his parents' money.

"Maybe I'll keep much more money to go to France?" he said.

($1 = 0.8228 pounds)

Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×