UK expects tourist summer spending bonanza as pound stays weak

It’s over a year since the result of the Brexit vote became known and while the UK economy is starting to show signs of strain, one area that is staying strong is tourist spending in Britain, with the fashion and luxury sectors being key beneficiaries.

Visitors to the UK have prioritised luxury fashion shopping

The UK’s largest payment processor said it has seen an 18% surge in the amount tourists are spending in the country with Worldpay figures showing June spending on foreign debit and credit cards reached  £643 million. And it’s predicting a £2.4bn total retail spend for June through August if tourists continue shopping at their current rate.

Worldpay said it saw a 63% sales rise at department stores and in luxury shops, with tourists from the Middle East, the US and Russia more noticeable on the shopping streets of cities like London, despite tough economic times in some of those countries.

Russian spending rose 25% while US spending rose 19%. And Middle Eastern visitors for Eid al-Fitr, marking the end of Ramadan in late June, spent 59% more than during an average week.

Worldpay, referring to a “spending frenzy”, said Eid is a useful barometer to judge overall foreign spending with the increase this year likely to point to ongoing strong spending by tourists.

And while London is a key destination for shopping-focused tourists, the payments firm said that destinations across the UK “are benefitting from an influx of free-spending tourists” too. Businesses in Scotland and Wales saw foreign spending rising by 27% year-on-year last month and with the weather staying reasonably warm and sunny, this should continue until the end of the summer.

The UK has seen tourist numbers rising since June 24 last year when it became clear that Britain had narrowly voted to leave the EU. The pound’s value plunged, making goods in UK stores instantly much cheaper for tourists. And despite some tweaks on the part of luxury brands to standardise UK prices with those in mainland Europe, Britain remains highly attractive as a shopping destination.

As well as cheaper goods, it has been helped by the fact that hotels and deign also now cost less than elsewhere in Europe bringing down the overall cost of a shopping trip.

A number of UK firms, including Burberry and Mulberry, have reported getting a boost from tourists this year. And that could continue beyond the traditional warm weather tourist season as the pound remains weak against a basket of currencies, despite signs a few months ago that its value was climbing. The dollar exchange rate again slipped below the £1 to $1.30 level only this week and this week’s euro rate of £1 to €1.11 is an eight-month low.

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