The strong pound and escalating conflicts around the world have scuppered spending sprees among overseas visitors to the UK and pushed international spending to a five-year low.
The latest figures reveal that a collapse in the number of visitors from China and Russia – who are usually big spenders – is to blame for the weak figures.
Global Blue, a retail specialist, has found that tax-free spending among shoppers coming into the UK has fallen for the first time since the aftermath of the global financial crisis in 2009, and is down at an annualised rate of 4 per cent since the start of this year.
Gordon Clark at Global Blue said the decline has been caused by “political unrest and weakened home currencies”. He said overseas shoppers are “spending more per transaction but are making fewer purchases than they would have in the past”.
Chinese spend is up by just 8 per cent so far this year compared with last – much less than the 20 per cent to 50 per cent growth rate previously.
Meanwhile, the Ukrainian crisis has hit consumers in the region and the Russian rouble reached a record low this year – making shopping in the UK even more expensive. Russian shoppers have spent 20 per cent less in the UK in the period, Global Blue said.
Luxury goods have been particularly badly hit by the slowdown as they rely on overseas shoppers. London, Paris and other top tourist destinations in Europe have been affected and Laura Levy, an analyst at Barclays, said: “Most luxury companies saw softer trends in Europe in the second quarter and highlighted weaker tourism spending. The July data suggests that this trend deteriorated further at the beginning of the third quarter.”
She added that Chinese tourism spending remained weak but that the slowdown in Russian spending on luxury goods had improved slightly in July, with sales down 5.9 per cent last month, against the June slowdown of 13 per cent.
Worst hit by the penny pinching has been fashion and clothing, with a 6.3 per cent decline in July, while leather goods and bags were down 2.5 per cent last month compared with the same period last year.