From Paris to Milan, our rivals are cashing in as the UK flounders

Hot on the heels of London Fashion Week, our rivals in Paris are wrapping up their own designer showcase.

The battle between iconic British and French fashion brands has a long history.

Savile Row and our fashion houses are world-renowned, just like the boutiques on the Champs-Elysees.

But our fashion industry – and London and the UK more broadly – is operating at a stark competitive disadvantage.

This is reflected by the decision of Mulberry to close its Bond Street store in London last year.

Showcase: Models pose on the runway during London Fashion Week. Britain’s fashion industry – and London and the UK more broadly – is operating at a stark competitive disadvantage

It is also underlined by repeated warnings from retailers that the Government’s decision to abolish tax-free shopping on goods for international visitors in 2021 is costing them business.

The ‘tourist tax’ is pushing high-spending visitors away from the UK as they effectively pay around 20 per cent more for the same goods than they do in the likes of France, Italy, Germany and Spain.

This in turn is hitting British brands that employ people across the country through outlets and their supply chain.

Tourists disproportionately spend more money on these brands when they visit London than they do if they visit another country.

France now accounts for 46 per cent of all tax-free sales in Europe, up from 30 per cent in 2020. 

And figures from tourism shopping tax refund company Global Blue show that 10 per cent of UK spending by international shoppers in 2019 has moved to EU countries, which all offer VAT-free shopping.

But this is not just about a single sector – important as fashion and retail are.

London and the UK are also losing out on wider spending from visitors on hotels, restaurants, museums, theatres and much more.

The Centre for Economics and Business Research puts the impact of the tourist tax at a staggering £11.1billion in lost GDP, in addition to putting off 2m travellers from visiting the UK each year.

Chancellor Jeremy Hunt’s welcome decision to order a review by the Office for Budget Responsibility into this measure opens the door to scrapping the tourist tax when he stands up at the despatch box tomorrow. 

The Government should use the Spring Budget to put an end to a measure that is driving business into the hands of our rivals.

Doing so would boost our flatlining economy and more than pay for itself by increasing spending in London and the UK, which in turn would deliver a significant net increase in tax revenues annually. 

With the UK economy stagnating, we must seize the moment to attract high-spending visitors and maximise the capital’s attractiveness to overseas tourism.

This is particularly important in the run up to the Olympics later this year when up to 3m visitors will flock to Paris.

The Chancellor should reintroduce VAT-free shopping on goods this week to encourage more of these visitors to cross the Channel and spend here over the summer.

This also matters when it comes to business tourists. Many are increasingly concerned by red tape, associated administrative costs and delays when it comes to attending conferences and exhibitions in the UK.

This bureaucracy should be streamlined so these high-spending visitors choose to make purchases here rather than overseas.

It is also important that planned changes requiring more data to be collected at border checkpoints, such as Eurostar at St Pancras, are implemented in a way that does not cause lengthy delays.

Organisations that represent around 1.5m employees across the country have signed a BusinessLDN letter urging the Government to scrap the tourist tax.

The Chancellor should use the Spring Budget to demonstrate his commitment to growth by acting now.

This post first appeared on Dailymail.co.uk