UK spending on valueless shopping in the EU soars five times as UK policy faces rebound
British consumers are increasingly flocking to Europe to take advantage of VAT-free shopping incentives, and new data shows that spending has increased fivefold since the UK government has provided duty-free shopping for international tourists in 2021.
Data released by the International Retail Association (AIR) show that UK shoppers spent £742 million on EU VAT-free goods in 2024, up from £527 million in the previous year and only £147 million in 2021. The trend continues until 2025, with the initial 22% spending by 2024 being the top 22% in 2024.
Overseas spending has increased dramatically after Britain decided to abolish foreign tourists’ shopping after Brexit. Meanwhile, EU member states began offering tax discounts to UK tourists for the first time, creating a clear gap, which changed the high-end retail spending across the channel.
Retailers and industry groups warn that the decision is damaging the UK’s competitiveness as a shopping destination. Business leaders are now intensifying calls for Prime Minister Rachel Reeves to withdraw the policy amid concerns that UK retail and tourism are losing to European competitors.
More than 500 senior figures across the retail and hospitality industry, including the owners of Burberry and Primark, supported the campaign to resume VAT-free shopping. The International Retail Association believes that bringing the scheme back will boost the UK economy, create thousands of jobs and generate additional tax revenue.
Air estimates that the reintroduction of duty-free shopping will provide GDP growth of £3.65 billion, creating 73,000 jobs, generating £1.8 billion in regional growth and returning more than £500 million in additional VAT revenue. The group claims that British travelers have become increasingly savvy, realizing that the VAT available in countries such as France, Spain and Italy far offset the cost of luxury and high-value purchases for travel abroad.
France has become the most popular EU destination for VAT-free shoppers without the UK, accounting for 35% of all these spending, with Paris alone responsible for nearly three-quarters of that figure. Air said this shopping-led travel trend is now supporting hotels, restaurants, transport providers and other industries in Europe, while high streets in the UK continue to suffer.
In 2023, British luxury brand Mulberry blamed the loss of VAT-free shopping to close the flagship store on London’s Bond Street, citing reduced demand from international shoppers. Other businesses have responded to these questions, warning that the UK is now the only country in Europe that has not offered duty-free shopping offers to overseas tourists.
Helen Brocklebank, CEO of Walpole, UK’s luxury brand trading agency, said the losses from VAT-free shopping are undermining growth and undermining the wider economy.
“Every pound spent by UK and international tourists in Europe rather than the UK threatens growth, denies fiscal revenue and undermines the competitiveness of retailers, manufacturers, hotel businesses and iconic brands,” she said.
Despite increasing pressure from business leaders, the Treasury has so far defended the decision to abolish the plan. A government spokesman said the UK remains one of the most visited countries in the world, pointing to a strategic plan for the new national tourist economy that will be unveiled this fall.
“The UK is one of the most visited countries in the world, and international tourism has driven a multi-billion dollar economy,” the spokesperson said. “We are supporting the continued growth of the industry and will develop a national tourist economic strategy this fall to help us be ambitious to welcome 50 million international tourists each year between 2030 and 2030. Visitors can still ask for relief where the items purchased are shipped directly to their home country for export.”
However, industry leaders believe that this alternative is too restrictive compared to the seamless in-store refund system offered by EU retailers and that the UK risks lag further unless the tax-free scheme is resumed. As the fall budget approaches, ministers are increasing pressure to reconsider the policy and help restore the UK’s appeal as a destination for high-spending tourists.
