The UK is missing out on a spending boom from Middle Eastern tourists, who are heading to mainland Europe to make use of tax-free shopping schemes, new figures revealed.
The statistics show that tourists from Arab countries are heading to Rome and Paris to splash their cash, snubbing London due to its hated tourist tax.
More than 350 prominent businesses have signed an open letter calling on the Chancellor to reinstate a 20pc refund incentive for international visitors.
And they were given more backing for their calls as it was revealed shoppers from the United Arab Emirates (UAE) and Saudi Arabia spent 34pc and 94pc more, respectively, across Europe in July versus June, according to Planet, which processes tax-free refunds.
The UK is missing out on a spending boom from Middle Eastern tourists, who are heading to mainland Europe to make use of tax-free shopping schemes, new figures revealed
Both countries are now in the list of top five spenders in the tax-free market, alongside shoppers from the US, China and the United Kingdom.
Planet said that travel had been driven by Eid ul-Adha, the public holiday in Muslim countries that carried over into early July, and the Islamic New Year holiday later in the month.
But the UK has lost out on a chance to cash in, business leaders warned.
Typically there would be a ‘spending bonanza’ in Knightsbridge during Islamic New Year and Eid, according to Steven Medway, chief executive of the Knightsbridge Partnership, which represents 200 businesses in the area.
But he added that ‘this year has been a different story, with our members telling us that July was very subdued in terms of visits by GCC tourists’ and the latest figures proved these tourists were ‘choosing to go elsewhere’ in Europe.
‘With tax free shopping being the cherry on the cake, prime Europe is helping itself to a bigger slice of the tourism market.
Counterproductive policy decisions are leading to a negative impact on the restaurants, shops and hotels of Knightsbridge,’ Medway said.
France is now the most popular destination for visitors from Saudi Arabia and the UAE
France is the most popular destination for visitors from Saudi Arabia and the UAE, followed by Italy, Planet said.
Last month tourists from the UAE spent 73pc more than they did in June 2019, a level of spending only matched by the US.
Cllr Geoff Barraclough, a Westminster City Council councillor, said: ‘Oxford Street and the West End are a major attraction for high spending Middle East visitors and by not offering VAT free shopping, we are effectively telling them to go and spend their money in Paris or Berlin.
‘As the latest data shows, other European destinations are more than happy to take the cash from GCC shoppers if London is not competitive.’
An open letter to the Chancellor, organised by hotelier Sir Rocco Forte, has garnered support from business leaders across the retail, tourism and hospitality sectors.
Dozens of MPs from across the political spectrum have thrown their weight behind the Mail’s campaign, and serving Cabinet ministers are known to have privately taken up the case.
So businesses are hopeful that Chancellor Jeremy Hunt will reverse his predecessor Rishi Sunak’s 2021 decision to scrap the incentive at the upcoming autumn Budget in November.
Top British companies including Burberry and Marks & Spencer backed The Mail’s Scrap the Tourist Tax campaign
Earlier this summer, Treasury officials requested new evidence of the ‘wider economic impact’ of the scheme.
A study from the Centre for Economics and Business Research has found that the economy would be better off by more than £10billion a year by reinstating VAT refunds. The research flies in the face of Treasury claims that the scheme would cost the British taxpayer £2billion.
John Dickie, chief executive at BusinessLDN, which represents Heathrow and Gatwick Airports, said: ‘Our European neighbours such as France, Spain and Italy are winning high-spending tourists from America, China and the Gulf by offering VAT-free shopping for international visitors and the UK is seriously missing out as a result.
‘Restoring VAT-free shopping would deliver an immediate boost to shops, restaurants and hotels not just in London but right across the UK, and help the economy break out of its low-growth trap.’