UK Retailers Push for VAT-Free Shopping Revival to Boost Tourism Spending

British retailers are mounting pressure on Chancellor Rachel Reeves to reconsider the reinstatement of VAT-free shopping for tourists, a policy scrapped post-Brexit. The Association of International Retail estimates that reviving the scheme could unlock an additional £3.65 billion in spending from EU visitors, compounding the £1.5 billion loss from non-EU tourists since 2021.

The MOVE pits retailers against Treasury orthodoxy, which views the tax break as fiscally unsustainable. Luxury brands like Mulberry and Fortnum & Mason argue the UK is ceding ground to European rivals—France and Spain continue offering VAT rebates, creating a competitive imbalance.

With the autumn budget looming, Reeves faces constrained fiscal flexibility after retreating on welfare reforms. The political calculus appears unfavorable for policy reversal, despite retail sector warnings about missed economic multipliers.