Monday 7th April was a galvanising moment for Britain’s £81 billion luxury sector. Speaking at Jaguar Land Rover’s Coventry manufacturing facility, the Prime Minister pledged far-reaching support for the critical high-value manufacturing industry and, by consequence, for the British luxury sector – which now represents 3.7% of GDP. This support should resonate across every workshop, studio, hospitality venue and production line.
In response to US tariffs on UK goods, the government has promised swift, pragmatic action to "shelter British business from the storm." Measures include regulatory flexibility for carmakers, which will allow high-value manufacturers to continue producing petrol vehicles beyond 2030, alongside investment and policy support across key sectors from clean energy to life sciences.
This breathing space acknowledges the extraordinary contribution of Britain’s luxury industry, which supports over 450,000 jobs, £25.5bn in tax revenues and a global leadership position in high-value manufacturing across cars, fashion, textiles, spirits and ceramics.
But if the government is serious about "backing British brilliance," it must do more. That’s why I am calling for the reinstatement of Tax-Free Shopping for international visitors.
The scrapping of tax-free shopping in 2021 has limited the sector’s extraordinary trajectory, which had been on course to grow to £125 billion by 2028. In today’s volatile global economy, can we afford to forgo a national dividend of this scale – in jobs, exports, skills – by denying our growth sectors a level playing field for international spending power?
Reversing this policy is not a luxury. It’s a growth strategy with a proven, evidence-backed return. For every £1 spent by high-value visitors, £8 flows into the economy. These travellers spend 14 times more than the average tourist, and more than half is spent on culture, shopping, and entertainment, fuelling not just luxury but the entire tourism ecosystem. Yet Britain is falling behind, held back by a policy that prevents us from competing with global cities.
A 2022 Oxford Economics study showed that bringing back tax-free shopping would generate £340 million in additional tax revenues, create 78,000 new jobs, and add £4.2 billion to GDP. That is a 700% return on investment.
Luxury is one of the UK’s most dynamic growth sectors, expanding at 11% annually. Exports account for £56 billion, with the United States representing 22% of this figure, making it this country's single most important market. American visitors are also the UK’s highest spenders.
As global cities compete to attract travelling US shoppers hit by tariffs, we must not be left behind. In Europe, Non-EU tourist spending rose 198% on 2019 figures by 2022 – but such spending fell 28% in Britain. If US customers are facing higher prices at home, then we should roll out the red carpet for them to visit the UK.
From Wedgwood in Staffordshire and the shoemakers of Northamptonshire to Scotland’s distilleries and the textile artisans of Yorkshire, luxury is no niche. It is a national economic and soft-power asset. It demonstrates Britain’s manufacturing excellence in every global market, underpinning our influence and economic resilience.
Now is the time to act. Reinstating tax-free shopping would send a clear signal that Britain is open for business: confident, competitive and committed to its world-leading industries.
The Prime Minister was right at Jaguar Land Rover earlier this week. People may talk down manufacturing, but they should not. Britain still makes things, and it does so brilliantly. More than that, the things we make add significant value to our economy. From exports and tax revenues to jobs and global influence, British luxury is not just what we do, it’s how we grow. Now is the time to let it compete.
