SHOPPING beneath the Christmas lights is one of central London’s great attractions – a picturesque bustle that’s great for British business. For my business, Richard James, and other UK retailers, it’s our busiest period and accounts for a large chunk of our annual income. But we’re losing out, as high-end international shoppers desert London and head to Paris, Milan and other European cities.

All because of what retailers have mockingly dubbed a “tourist tax” – namely, the loss of the tax-free shopping scheme, which until January 2021 allowed international visitors to the UK to claim 20% VAT back on their purchases.

Axed by then chancellor Rishi Sunak, this measure is different to the idea of charging tourists a nominal sum for each night of their stay and far more pernicious, as it instantly makes shopping in the UK 20% more expensive for foreign visitors.

And it’s not only tourists that are worse off. In October, the Centre for Economics and Business Research found the axing of the tax-free shopping scheme was costing the UK £11.7billion in lost revenue by keeping big spenders away from our shores every year, negatively impacting on restaurants, hotels and attractions.

It also means that London’s Bond Street, once the go-to destination in Europe for luxury shopping, has now been overtaken by the Champs-Élysées in Paris and the Via Monte Napoleone in Milan. The latter is booming for three reasons: the prestige of to its luxury shops, the strength of the euro against the dollar and, most importantly, because Italy offers tax-free shopping to customers from outside the EU.

The impact of Mr Sunak’s decision was not immediately apparent in 2021 as the country was in the grip of Covid and lockdowns and international visitors were scarce.

But with tourist numbers back to pre-pandemic levels, stores are struggling. The consequences of not giving foreign visitors this 20% refund is clear to most – except Rachel Reeves, a “pro-growth” Chancellor who has just heaped even more misery on the retail sector by hiking employers’ national insurance contributions.

I set up Richard James on Savile Row, the acclaimed centre of British tailoring, in 1992 with a bank loan of £10,000.

The business has grown, but we remain a relatively small concern. We make both ready-to-wear and bespoke menswear and we’re the only bespoke Savile Row tailoring house to have won the British Fashion Council’s Menswear Designer of the Year award.

We’ve worked hard to establish a global reputation because international visitors – particularly those from the US and Middle East – have long been the lifeblood of Savile Row. And as a small business, the downturn in international shopping affects us badly.

As we’re a high-end retailer, you might think we should stop snivelling and swallow our losses. But while our prices are undoubtedly high – our two-piece bespoke suits start at £6,100 – so too are our costs.

The rent and rates in Savile Row are steep, and the wonderful cloths that we use – many from British mills such as Fox Brothers in Somerset and Dugdale Bros in Lancashire – are far from cheap.

Not to mention our personnel. A Savile Row cloth cutter typically serves a five or six-year apprenticeship and a coat-maker three to five years. Between 50 and 70 hours goes into making one of our bespoke suits. This means that our margins are much tighter than some might imagine. Last week, I spoke to a long-time Savile Row customer from New York. He was here to have two suits made, something he does every year. He’s an Anglophile and loves London. He was very impressed with the luxury hotels and restaurants.

But this year, he explained he was going to Paris instead of Bond Street for the little luxuries he enjoys.

Were he to spend £5,000, he said, he would basically save himself £1,000 by shopping in France – including the travel. When tourists go elsewhere, they spend less in the UK and more with our competitors.

Of course, the quality of tailoring on Savile Row is second to none, and I’m a great advocate of British style. But the price tag is still the first thing many shoppers look at.

And this Christmas pain is in part a result of the cruel tourist tax. So let our foreign visitors claim back VAT – and let’s get our customers back.

• Sean Dixon is the co-founder and MD of Richard James, a Savile Row tailor established in 1992