UK luxury is £81bn industry says new report

The UK luxury sector is now worth £81 billion a year to the UK economy and supports 450,000 jobs, according to a new report by British luxury body Walpole. It also said the sector’s contribution to the economy has grown 69% in only five years. That’s despite Brexit, the end of tax-free shopping for tourists, Covid-19 and supply chain issues.

Walpole added that the luxury segment’s contribution to the country’s tax receipts is £25.5 billion, “enough to fund the development of 51 mid-sized hospitals or train 373,134 nurses”.

Importantly too, the UK luxury sector’s total exports have risen 45% in half a decade to reach a value of £56 billion.

But the body — which includes many of Britain’s luxury brands and retailers (such as Alexander McQueen, Burberry and Harrods) as its members — said future growth will be dependent on tax reform and improvements to intellectual property laws “to secure highly-skilled, historic crafts in the regions”.

Walpole’s Luxury in the Making report was produced in association with Frontier Economics and found that the luxury sector’s economic contribution is equivalent to 3.7% of GDP. 

It’s the group’s first such study for five years and shows that the luxury sector has outperformed in recent years even in the face of some massive challenges. And it expects it to continue performing at a high level with a forecast that by 2028, British luxury could be contributing £125 billion a year to the economy.

If that happens, it would mean luxury generating more revenue than the life sciences and construction industries, both of which are often seen as more important to the economy by the government.

Helen Brocklebank, Walpole’s chief executive said: “We have quantified the significant high-quality employment offered by the sector throughout every region in the UK across hospitality, retail and manufacturing. The UK luxury industry deserves recognition and support to ensure our high-growth sector continues to flourish.”

As mentioned, there are major threats to the sector’s long-term prosperity. Walpole is calling for changes to be made to the UK’s Geographical Indicator (GI) regime. 

This set of intellectual property laws are granted to products that have a specific link to the place where they’re made (like scotch whisky). It would like to see the laws extended from just food and drink to areas like Savile Row tailoring and Staffordshire pottery.

It added that “policymakers must also shape a tax and regulatory system that supports high-quality employment”. It said the recent Spring Budget was “a missed opportunity to reintroduce VAT-free shopping for international visitors. However, failure to introduce a new scheme would cause the UK to miss out on potential growth, tax receipts and employment opportunities. The Association of International Retail estimates retailers will lose £1.5 billion per year to tax-free EU competitors”.