London losing pull for luxury shoppers - experts

STORY: London is one of the world's best known luxury retail hubs.

But major stores like Harrods fear tourists from the U.S., China and the Gulf could head for Paris and Milan instead.

Experts say high-end consumers have been drawn away from London as the European Union offers tax-free shopping that amounts to a big discount.

Steve Medway is CEO of lobby group the Knightsbridge Partnership.

"You know, we've heard from some brands that they're prioritising Paris for investment in their stores, or even new openings of brands that don't exist in London are prioritising Paris because they're seeing the sales and the people there, you know, shopping."

Data from the tax refund firm Global Blue showed spending by U.S. visitors to Britain is back at pre-health crisis levels.

But spending by American visitors has more than doubled in France and Italy, where they can reclaim the tax on goods.

Spending by visitors from Gulf states to the UK is still well below earlier levels, while in France it's doubled.

To make things worse, British shoppers themselves are also spending more in the EU as they too can get the tax back.

Industry executives have urged the UK to become more competitive and bring back tax-free shopping for tourists.

Sarah Jaconelli is Director of Communications for New West End Company - which represents 600 businesses.

"We could have been, after Brexit, the biggest global shopping destination, the closest global shopping destination for the whole of Europe to come here, that's 400 million EU residents would have been eligible for tax free shopping in the UK."

The tax-free benefit ended in 2020 after Britain left the EU.

Ministers dropped the tax break to help raise revenue, saying an assessment found VAT-free shopping didn't have a big impact on tourism.

Luxury brands say the latest data tells a different story.