Conservative Party leader Kemi Badenoch’s pledge to restore tax-free shopping for international visitors if her party wins the next election has put Britain’s competitiveness as a visitor destination firmly back in the headlines. It is a welcome intervention. Walpole has consistently campaigned for the return of tax-free shopping because asking international visitors to pay 20% more here than they would in competing European destinations puts British businesses at an obvious disadvantage.
But tax-free shopping is only part of the picture.
Britain is competing for the world’s most valuable visitors, and our success is determined not by any single tax or policy but by their cumulative effect. Over recent years we have steadily added to the cost and complexity of coming to Britain, while the countries we compete with are working hard to attract more international visitors and more of their spending.
The prize is considerable. Walpole’s What It’s Worth research found that high-value international visitors spend 14 times more than the average visitor. For every £1 spent by someone staying in high-end accommodation, a further £8 is generated across restaurants, retail, culture and entertainment.
Britain’s £81bn luxury sector supports more than 450,000 jobs across the UK, and high-value international visitors are an important part of that economy. Their contribution extends far beyond luxury retail, through hotels and restaurants, theatres, galleries and cultural institutions, transport and the businesses that supply them. International visitor spending is, in effect, an export: overseas money flowing directly into businesses and communities across Britain.
Britain also has an extraordinary amount to offer. London remains one of the world’s great cities, while Manchester’s cultural and hospitality scene is growing rapidly. Beyond them, the UK offers exceptional countryside, cultural and sporting events and world-class food, drink, craft and heritage.
But competition for these visitors is intensifying.
France welcomed 102 million international visitors in 2025, generating €77.5bn in international tourism receipts, and wants that figure to reach €100bn by 2030.
VisitBritain forecasts 44.2 million inbound visits to the UK in 2026, generating £33.9bn. Yet long-haul visits are expected to fall by 3% and spending by 2%, while real-terms inbound spending is forecast to remain at only 90% of its 2019 level.
New West End Company has also reported that non-EU visitor spending in the UK stood at 75% of its 2019 level by October 2025, compared with 159% in France and 137% in Italy.
Restoring tax-free shopping would make a material difference. Giving international visitors a level playing field to shop here would direct more spending into British businesses, their supply chains and ultimately the Exchequer. Without it, highly mobile international visitors have every incentive to spend that money in Paris, Milan or Madrid.
But it will not, on its own, solve the wider competitiveness problem.
Hotel accommodation in the UK attracts VAT at 20%, compared with 10% in France, Italy and Spain, 7% in Germany and 6% in Portugal. Many visa-free travellers require a £20 Electronic Travel Authorisation (ETA). Air Passenger Duty adds to the cost of getting here, while the prospect of an Overnight Visitor Levy would add another cost to staying here.
Each of these policies has its own rationale, but together they make Britain a more expensive and more complicated place to visit.
For a high-value international visitor deciding between London, Paris and Milan, these things are not experienced as separate policies. They simply affect the cost and ease of the trip, and how much they choose to spend when they get here. Yet the decisions are made across different parts of government, without enough consideration of their combined effect on Britain’s ability to compete for international spending.
An International Visitor Growth Strategy would give government a way to look at the whole picture. It should have a particular focus on the visitors who deliver the greatest economic value and consider the cumulative impact of taxation, regulation and the cost and ease of visiting the UK.
This is an economic growth opportunity. International visitors bring overseas money into Britain and spend it in hotels, shops, restaurants, theatres, galleries and businesses across the country, supporting jobs and generating tax revenues as they do so.
Britain has an outstanding offer and enormous international appeal. We need to convert more of that appeal into economic value: bringing more high-spending visitors here, encouraging them to stay longer and capturing more of their spending for the British economy.
Restoring tax-free shopping would be an important step. But it is one part of a much bigger competitiveness picture.
We have to compete for these visitors.
