The elusive elixir of economic growth seems as far out of reach as ever, as today’s confirmation of recession shows. Anecdotally, I am hearing the first six or seven weeks of the year have been tough for many retailers, suggesting that a bounce is still some way off.
It seems inexplicable then that the Government has persisted as long as it has with an anti-growth measure that it knows harms its GDP motor — London.
The figures we report on today from the New West End Company are deeply concerning.
London’s tourist scene is now as busy as its ever been — but not at the tills.
A huge “spending gap” has opened up between the number of visitors on the ground in the capital, and how much shopping they do.
That is great news for Eurostar as American, Middle East and Asian shoppers hop on the train for the two-hour trip to Paris where the 20% VAT refund is still very much in place.
The right to a VAT refund was only ever open to non-EU visitors. It was abolished on the very day that Brexit came fully into force in 2021.
So we do not know how much of a boost having it available to an extra 450 million European shoppers would have made after leaving the European Union. But the potential is huge.
A reversal would at a stroke put London back on a level playing field with its main competitors particularly and Milan, and provide a massive marketing tool to the hospitality, retail and tourism industries that do so much to power London’s economy.
The early March Budget would be perfect timing for Jeremy Hunt to perform a U-turn, just as foreign visitors are making their summer holiday plans. A London that is 20% cheaper than last year would be massive driver of spending — and growth.
