The closure of Mulberry’s iconic Bond Street store in London marks a significant moment for the brand and the high street. The renowned brand first opened its doors on the prestigious street in 1995, but now it is closing due to a combination of the “tourist tax”, high rents and business rates.
International tourists were allowed to reclaim VAT on purchases until January 2021, when the tax break was abolished by then Chancellor Rishi Sunak. Although Kwasi Kwarteng tried to reintroduce the incentive in his “mini-Budget”, it was reversed a month later by Mr. Hunt. The Treasury claims that the abolition of the VAT tax break will save £2 billion a year, but this figure has been disputed by some economists who believe it will actually hit the public purse.
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In December, the leaders of Harrods and Selfridges backed calls for a review of the tax, and last month the finance chief of rival brand Burberry, Julie Brown, said that demand from foreign tourists in London had bounced back at a much slower rate than in Europe since the pandemic. The biggest increase in spending was by Middle Eastern visitors, which was up 122% in Europe, but only 14% in the UK. Michael Ward, CEO of Harrods, stated that there was “very clear, factual evidence to show Paris has done disproportionately well as a consequence of this”.
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