Figures from Global Blue, a company which monitors tax-free spending in the UK, show that total spending in the seven months to July fell by 4 per cent year on year.
The slump is thought to be due to a mixture of political instability and the strong pound. Spending by Russians fell by 20 per cent in the wake of a cooling economy and the Ukraine crisis, and spending by Thais fell by 27 per cent, perhaps reflecting ongoing constitutional wrangling in the country and a difficult exchange rate.
The Chinese remain the biggest spenders in the UK, accounting for 27 per cent of all foreign spend, but growth slowed from the 20-50 per cent increases seen in recent years to around 8 per cent.
Gordon Clark, UK country manager of Global Blue, said:Our figures show that political unrest and weakened home currencies are leaving shoppers from our top spending nations in a position where they are still spending more per transaction (+1% YOY overall for the UK) than before but are making less purchases than they would have made in the past, resulting in the UK seeing a -4% YOY reduction in the sales in store from Tax Free shopping.
More than ever now British retailers and hotels need to review their international marketing plans, product range and staff training to ensure they still continue to secure this crucial international spend.
China was followed by the four middle eastern countries Kuwait, Saudi Arabia, Qatar and the UAE. Qataris, known for splashing the cash in London’s hotels and department stores, spent a remarkable average of 1,465 per transaction.