The UK will miss out on more than £3bn of tourist spending this year as “Europe eats Britain’s lunch” after a tax raid on travellers by Rishi Sunak, new data suggests.

Figures show that spending by visitors from the US and Gulf states has surged in France and Italy while barely reaching pre-pandemic levels in the UK after the government imposed VAT on their purchases of goods.

Separately, official figures showed that the Government has £13bn of headroom for tax cuts after public sector borrowing came in lower than expected.

The data comes amid a growing political backlash against the VAT rules, which were introduced by Mr Sunak in 2020, imposing a 20pc sales tax on tourists visiting Britain from outside the European Union.

Priti Patel, a former Cabinet minister, said: “Britain should be open for business and bringing back tax-free shopping will attract tourists to spend money here.

“The Chancellor must look at this policy as it would make our country more competitive, boost our economy with billions of pounds more being spent in Britain and tens of thousands of jobs would be created.”

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