Rishi Sunak was challenged by the chairman of Burberry over the “spectacular own goal” of a post-Brexit VAT change as the Prime Minister sought to repair the Conservatives’ reputation with business.
Gerry Murphy told the Prime Minister on Monday that his move to scrap the VAT refund for tourists has made Britain the “least attractive” shopping destination in Europe.
Sunak insisted to around 200 high-profile chief executives assembled at a Business Connect conference he convened in London that the Government has “got your back”.
“Obviously more business friendly”
He is battling to patch up the relations with industry following the challenges of Brexit and coronavirus and the leaderships of Boris Johnson and Liz Truss.
Murphy welcomed Sunak as being “obviously more business friendly than some predecessor administrations”.
But the chairman of the luxury retailer added: “It is somewhat perverse that on the day that we left the single market, a decision by, I think it was by you as chancellor, to remove the VAT refund for tourists made the UK the least attractive shopping destination in Europe.
“Leaving the EU has had a significant friction effect on trade, hopefully not forever … but it is the case it was a drag on growth.
“So we ask you to look at this specific one (VAT), this is a spectacular own goal, one that can be reversed by a decision from you or from the Chancellor.”
Mr Sunak insisted there “were good reasons for it” but said he would look at the data to “see if things are panning out as we expected to, or not”.
Opening his speech, he had told the crowd that ministers are focused on driving up skills in Britain and boosting growth while developing a migration system to attract talent.
“We want businesses small and large to know that this Government has got your back,” Mr Sunak said.
Mismanaging the economy
Labour seized on the conference to accuse the Tories of having mismanaged the UK economy.
Shadow chief secretary to the Treasury Pat McFadden said: “After 13 years, the pattern of Tory economic failure is grinding on.
“Families in Britain are being harder hit by price rises than many comparable economies.
“Other countries have had to cope with Covid and the consequences of the war in Ukraine, yet it is Tory Britain which sits at the top of the inflation growth league of major industrial economies.”
Earlier this month, IMF economists stated that they expected the UK economy to grow slower than other developed G7 nations, with a contraction of 0.3% this year before rebounding to grow by 1% next year.
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