LONDON • While the prospect of Brexit is weighing on much of the British economy, tourism and luxury goods businesses are cashing in on bargain-hungry visitors lured by the slide in the pound.
London's tourism agency says sales of goods eligible for sales-tax exemption have gone up by a third since the Brexit vote in June, which sent sterling plunging against the euro and US dollar.
"We calculated that over the last four months, it's been about 12 per cent cheaper for Europeans to come and shop here," said Mr Chris Gottlieb, head of leisure marketing at the agency London & Partners.
The pound is at about €1.17, compared with €1.3 before the shock vote to leave the European Union, while it has also fallen to US$1.25 from US$1.49.
The result is that London has become the cheapest city worldwide for luxury goods shopping in US dollar terms, says a study by Deloitte.
In tourist areas, the effects are evident.
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We're going to spend much more money than we planned to. We didn't plan to shop too much but it's obvious that the prices are very good for us. So we shop and we can afford to eat and drink outside. That was not possible years ago.
BULGARIAN TOURIST RADOSTINA NONOVA
"We're going to spend much more money than we planned to," said Ms Radostina Nonova, a Bulgarian tourist, laughing as she lugged her bags along Carnaby Street - in the heart of London's shopping district.
"We didn't plan to shop too much but it's obvious that the prices are very good for us. So we shop and we can afford to eat and drink outside. That was not possible years ago," she said.
French tourist Christophe Disic said he did not come to London just because the pound was low but "when we changed our money, we realised we had a few more pounds for fewer euros".
When speaking to US tourists, shopkeepers are quick to take out their calculators.
"We're an American brand. Our products are designed and assembled in the US. But with the weakening of the pound, it actually happens to be cheaper for the American tourists to buy an American product in London," said Mr Denis Sagajevs, who works in Shinola, a shop selling watches and leather accessories.
"It's affected by the fact that they can claim VAT (value-added tax) on their way back. We pretty much on a day-to-day basis explain that to customers from the States. It happens to be quite a strong sales driver," he pointed out.
Some shops are adapting their advertising and sales tactics to the new consumer behaviour.
"Before the vote, European tourists were couples who came to be together and maybe bought a couple of things," said James, the manager of a luxury men's clothes shop in Carnaby Street."Now, there are groups of friends who rush in. They grab everything they can carry."
He estimated the number of European and US shoppers coming to his store has risen by 50 per cent.
Instead of spending on costly advertising in British newspapers as it did before, his company is changing tactic to appeal more to overseas visitors. They have put up signs outside Underground train stations near the shop.
But there are doubts about how long the boom can last. While the good health of the British economy was confirmed by solid growth of 0.5 per cent in the third quarter, the official forecasts for 2017 have been cut to 1.4 per cent from 2.2 per cent.
"Our British customer sales are not as strong as before the vote and we don't even know if this tourism boom is going to last," he said.