Two of Britain’s oldest luxurious manufacturers have reignited requires the return of VAT-free searching for worldwide vacationers, warning that President Trump’s sweeping new tariffs might divert American consumers away from the UK to continental Europe.
William Church, joint managing director of Northampton-based luxurious shoemaker Joseph Cheaney & Sons, mentioned Britain now “stands at a self-imposed competitive disadvantage to our European counterparts” following the abolition of the VAT refund scheme in 2021. He urged the federal government to “reinstate [the scheme] immediately to significantly stimulate badly needed economic growth”.
“The benefits would be strongly felt in the wider economy by making the UK a more economically attractive place to visit,” Church mentioned.
Ian Maclean, government chairman of John Smedley, Britain’s oldest knitwear producer, echoed the decision, stressing that the scheme supported companies and provide chains throughout the UK, together with in areas past London and the South East.
The VAT refund scheme, which allowed non-EU guests to reclaim the 20 per cent gross sales tax on purchases, was scrapped post-Brexit—a transfer that has been roundly criticised throughout the retail and hospitality sectors. Trade leaders have described its elimination as a “crazy, wrong-headed decision” that has broken Britain’s attraction as a purchasing vacation spot.
The difficulty has gained new urgency after the Trump administration launched contemporary tariffs that would elevate costs on US-bound items. Many worry that American vacationers, now going through larger costs at residence, could select to buy in EU international locations the place VAT-free incentives nonetheless exist—bypassing the UK altogether.
Walpole, the business group representing British luxurious manufacturers comparable to Alexander McQueen, Burberry and Harrods, mentioned reinstating VAT-free purchasing would ship a robust sign that the UK is “open for business” and critical about competing on the worldwide stage.
Below the earlier authorities, then-Chancellor Jeremy Hunt ordered a assessment of the VAT-free purchasing scheme by the Workplace for Finances Duty after sustained strain from enterprise leaders. Nonetheless, Hunt in the end opted to not reverse the coverage after the OBR estimated that restoring the scheme would value the Treasury £2 billion a yr by 2025-26, in comparison with financial savings of £540 million from its withdrawal.
Regardless of these fiscal considerations, luxurious manufacturers and retail companies argue that the broader financial advantages of reinstating VAT-free purchasing—together with elevated customer numbers, larger total spending and assist for British provide chains—far outweigh the projected prices.
As competitors for high-spending vacationers intensifies, business leaders warn that the UK dangers shedding out to European rivals until pressing motion is taken to degree the taking part in area.
