Luxury handbag maker Mulberry has swung to a half-year loss as it revealed sales tumbling by 10% across the UK as the economic uncertainty and cost crisis knocked shopper confidence (Mulberry/PA)
City comment: Jeremy Hunt junked almost all of Kwasi Kwarteng’s notorious mini-Budget when he got the keys to Number 11. But in one respect at least he was wrong to throw out the growth baby with the fiscal rectitude bathwater.
Retailers rightly celebrated when Kwarteng restored tax free shopping for foreign tourists - and were downcast when his successor snatched it away again just a few weeks later.
Now we can see why. British luxury fashion brand Mulberry today reports that the proportion of foreign shoppers in its West End stores paying for goodies such as a £1,000 Lily handbags has fallen from almost half to virtually zero.
With rents on Bond Street averaging around £1,150 per sq ft - about the same price as one of those handbags - it is not surprising that Mulberry’s boss warns that the current situation makes many stores “unviable.”
The ban on tax free shopping is justified by the Treasury’s argument that it represents an unaffordable £2 billion annual subsidy that almost exclusively benefits London.
Both those claims have been well and truly trashed by studies showing there will be a £350 million net tax gain for the Exchequer and that the economic benefits will spread out far and wide to manufacturers and suppliers all over the UK.
But more importantly it sends out a signal that in post-Brexit Britain foreign visitors are not as welcome to spend their money here as they are in France, Italy and Spain. It is a terrible message to be putting out when tourism could be such a bountiful source of foreign earnings and British jobs.
