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Inflation, the dreaded word across industries, continues to dampen consumer and retailer sentiment, and is slowing spending in the UK among residents and tourists, WWD reported, citing research from Jane Hali & Associates.
“We felt the slowdown in consumer spend was notable in the UK due to inflation and the lack of tourism,” the retail research company reported, adding that besides inflation, “real estate and energy prices remain a concern. Overall, we remain cautious of brands who have strong business in the UK.”
It’s not just UK shoppers exercising caution around discretionary spending. Wealthy Chinese tourists—who are shopping internationally again after Covid restrictions were lifted—are staying away.
Turns out Chinese consumers prefer countries like France, Italy, and Spain, which still offer VAT-free shopping, and which “are far outperforming the UK in foreign tourist spending,” Jane Hali, CEO of Jane Hali & Associates, told WWD.
When he was chancellor, UK Prime Minister Rishi Sunak discontinued tax free shopping for travelers in the UK. According to a report from the Centre for Economics and Business Research, the decision has likely cost the country £10.7 billion ($14 billion) and discouraged 2 million tourists per year from coming to the UK.
Tourist visa delays may also be deterring Chinese shoppers from visiting the UK; China is currently processing a backlog of applications.