Tom Athrun, CEO of Fortnum & Mason, warned in November that the retailer was bracing for a difficult summer. He said tourists who might have chosen to come to London during the Paris Olympics for a shopping trip without the tourist tax were now likely to choose to buy their designer goods on the continent. Unlike the UK, tourists can still claim VAT on purchases in countries such as France, Italy and Spain.
It comes after recent research revealed that tourists are still coming to London shopping centers but are not spending. Earlier this month, Mulberry blamed the tourism tax for contributing to declining revenues after it closed its Bond Street store last year.
The Treasury has previously argued that restoring VAT-free shopping would cost Britain around £2bn a year at a time, thwarting moves to pay down debt.
However, Hunt recently said he would continue to accept offers and consider this new information carefully, amid concerns that British brands are the most affected by the measure.
Insiders suggested this could mean the Treasury will look again at spring budget policy.
A Treasury spokesperson said: “We keep all taxes under review and recognize the value that retailers bring to Britain. That’s why we announced a £4.3 billion business rates package in the Autumn Statement to support businesses and high streets.”
“VAT-free shopping remains available to all non-UK visitors who purchase items in store and have them sent directly to their overseas address.”