Burberry calls on Burnham to restore tax-free London shopping for tourists

Burberry has urged Andy Burnham, the incoming UK prime minister, to restore tax-free shopping for tourists in London, arguing that the removal of the VAT refund scheme has significantly harmed the city’s appeal as a retail hub. The luxury fashion brand claims its tourist business in London has dropped by 50 percent since 2019, with customers increasingly shifting their spending to Paris, where Burberry’s sales have risen by 30 percent. CEO Joshua Schulman emphasized that reinstating tax-free shopping could help position London as the premier shopping destination in Europe. The decision to abolish the VAT refund scheme for tourists began in early 2021, leading to a noticeable decline in visitor spending in the UK capital. This shift has had a measurable impact on brands like Burberry, whose flagship store on New Bond Street has struggled to maintain its previous levels of foot traffic and sales. Schulman called on Burnham to prioritize restoring London’s status as a global shopping destination, suggesting it would align with the broader goal of boosting economic activity and investor confidence. Burnham, who previously served as mayor of Manchester, has positioned himself as a pro-business leader, emphasizing policies that empower marginalized communities and promote economic growth. In recent statements, he reiterated his commitment to supporting small businesses and fostering a stable environment for enterprise. His approach contrasts with some of the more progressive taxation proposals recently floated by other political figures, including plans to increase income tax rates for higher earners. The International Monetary Fund (IMF) has weighed in on the debate over tax policy, cautioning against abrupt changes that could destabilize the economy. According to the IMF, increasing the top rate of income tax might discourage investment and harm economic performance. Instead, the organization recommended targeted adjustments to tax brackets, particularly focusing on lower-income groups, along with increased support for working individuals through in-work benefits. It also suggested reducing extremely high marginal tax rates for the wealthiest citizens, noting that such measures could create a more balanced and sustainable fiscal framework. Investor sentiment has been shaped by these discussions, with figures like Mohamed Alardhi, executive chairman of Investcorp, expressing a desire for greater certainty in government policy. Alardhi noted that businesses seek consistency in regulatory environments and tax structures, stressing the importance of predictable frameworks that allow for long-term planning. He highlighted that while there are opportunities for investment in the UK, the lack of stability in policy decisions has made it challenging for firms to commit fully to the market. London’s position as a European shopping destination has been further weakened by the loss of the VAT refund system, which once attracted millions of visitors annually. With competitors like Paris gaining ground, the UK must address these challenges to remain competitive. Burberry’s call for action reflects a growing concern among retailers and investors that current tax policies are undermining the city’s ability to attract both domestic and international shoppers. As Burnham prepares to assume leadership, the pressure is mounting to deliver tangible economic reforms that can restore confidence in the UK as a viable investment destination. Whether through tax policy adjustments, infrastructure improvements, or marketing efforts to highlight London’s unique retail offerings, the coming months will likely see continued scrutiny of how the government addresses these pressing issues.