Sunak’s tourist tax has caused Rolex shoppers to abandon Britain. – Share Talk

Wealthy foreign shoppers seeking Rolex watches have turned away from Britain in favour of European cities like Paris and Milan, according to Brian Duffy, CEO of the UK’s largest luxury watch retailer, Watches of Switzerland.

Duffy attributed the decline in UK business to Rishi Sunak’s post-Brexit decision to eliminate VAT-free shopping for tourists. He explained, “We have a high average selling price, which means that 20% makes a significant difference. For a £10,000 purchase, that’s £2,000.”

He noted that tourists, including Americans, now prefer shopping in cities like Paris and Barcelona over London. Since VAT-free shopping was abolished in 2020, luxury retailers have urged the government to reinstate it, arguing that the decision has harmed British businesses and reduced the country’s appeal to high-spending visitors, coining the term “tourist tax.”

Duffy remarked, “We’re the only country in Europe that doesn’t offer this perk. Either we’ve discovered something that nobody else knows, or it’s another burden for retail to manage. We aim to be an attractive destination for tourists, and shopping is a significant part of that experience. It just seems crazy to us.”

He contended that the absence of VAT-free shopping has hindered the UK’s economic recovery from the pandemic, stating, “The UK simply missed out as an economy. Europe disproportionately benefited.”

These comments come as Watches of Switzerland reported a 2% rise in total sales for the year ending April 1, despite a 5% decline in sales in the UK and Europe. Statutory profits before tax fell by 40% to £92 million.

In addition to the tourist tax impact, the company has faced challenges from rising gold prices and reduced spending by “aspirational” shoppers due to high interest rates and the cost-of-living crisis.

Duffy summed up the situation: “We’ve had a bit of a perfect storm, especially in the second half of the calendar year 2023.”