As London maintains position as one of the world’s strongest cities, the UK loses footing in tourism competitiveness.
Notably, it ranked second in Oxford Economics’ 2026 Global Cities Index, slipping behind New York and ahead of Paris.
Nevertheless, the UK still placed seventh in the World Economic Forum Travel and Tourism Development Index. But it has descended four spots since 2019, while maintaining the same ranking as last year.
Simultaneously, the Conservative Party has pushed for restoring tax-free shopping for qualified non-EU tourists. The proposal comes amid Britain’s resolve to boost international visitor spending and compete with leading tourist destinations worldwide.
London ranks second among 1,000 global cities
Oxford Economics ranked London second among 1,000 cities in its 2026 Global Cities Index.
New York claimed first place, while Paris ranked third. Seattle and San Francisco completed the top five.
The index evaluates cities across five categories: economics, human capital, quality of life, environment, and governance.
London performed particularly well for human capital, ranking first globally in that category.
Nearly 40% of London residents were born outside the UK, according to the BBC’s coverage of the index.
That international population supports a diverse workforce while contributing to the capital’s cultural and culinary appeal.
Moreover, London continues attracting visitors with major museums, historic landmarks, entertainment venues, and neighborhoods shaped by international communities.
The city also performed strongly on environmental measures despite its size.
Policies including the congestion charge and Ultra Low Emission Zone have targeted traffic congestion and harmful emissions.
Consequently, London continues combining economic strength and international talent with efforts to improve urban living.
UK slips in global tourism competitiveness
London’s performance contrasts with the UK’s broader position in the World Economic Forum’s tourism rankings.
The UK placed seventh in the 2026 Travel and Tourism Development Index with a score of 5.08.
Japan topped the ranking with 5.27, followed by the United States at 5.23 and Spain at 5.22.
Australia placed fourth with 5.18, while France followed with 5.17.
Germany ranked sixth with 5.09, narrowly ahead of the UK.
However, Britain did not decline in the rankings during the past year.
Its seventh-place position remained unchanged year over year. Instead, the country has fallen four positions since 2019.
The index assesses 110 economies across 17 pillars grouped into five broader dimensions.
These include infrastructure, tourism resources, sustainability, tourism policy, and the wider business environment.
Therefore, the ranking does not simply measure visitor numbers or tourist satisfaction.
Instead, it examines how effectively destinations can support tourism while maintaining long-term resilience and competitiveness.
Tourism reaches record levels as pressures increase
The latest ranking comes as international tourism continues expanding.
A record 1.5 billion people traveled internationally in 2025, according to figures cited alongside the WEF index.
Additionally, tourism contributed $11.6 trillion to the global economy and supported 366 million jobs.
However, that growth has brought new pressures to the UK and globally.
Tourism became less affordable in 75% of the economies assessed.
Meanwhile, the industry could face a shortage of 43 million workers by 2035.
Investment has also struggled to keep pace with growing travel demand.
Consequently, the WEF report places greater emphasis on how destinations prepare for disruption and recover from unexpected events.
Recent challenges have included extreme weather, wildfires, heat waves, and aviation disruptions.
Cara Morton, Zurich Insurance Group’s CEO of Global Businesses and Operations, emphasized the growing importance of preparation.
“That’s not just good risk management. It’s how you stay competitive,” Morton said, according to Insurance Business.
As a result, attractive landmarks alone may no longer guarantee strong tourism performance.
Destinations increasingly need reliable infrastructure, digital connectivity, crisis planning, and sufficient staffing.
UK Conservatives propose restoring tax-free shopping
Against this backdrop, Britain’s Conservative Party has proposed restoring VAT refunds for eligible visitors from outside the European Union.
The party announced the proposal on September 21.
Under the plan, eligible non-EU tourists could reclaim VAT on qualifying goods purchased in Britain and taken overseas.
The former VAT Retail Export Scheme offered similar refunds before its abolition in 2021.
Notably, the previous Conservative government abolished the scheme.
The new proposal would initially cover non-EU visitors.
However, the Conservatives have said they could later extend it to EU tourists if evidence supports the economic case.
The party estimates that restoring tax-free shopping could attract up to 2.35 million additional visitors.
Furthermore, it projects the measure could generate £4.1 billion in additional spending.
Those figures represent Conservative Party estimates rather than independently established outcomes.
The current government has criticized the proposal as a reversal of the Conservatives’ previous policy.
A Treasury spokesperson also noted that overseas visitors can already receive VAT relief under certain circumstances.
That applies when retailers ship purchased goods directly to customers outside the UK.
Visitor spending remains below pre-pandemic levels
The debate comes as Britain continues working to maximize the economic benefits of international tourism.
International visitor numbers had returned close to pre-pandemic levels by 2024, according to VisitBritain estimates cited in recent reporting.
However, inflation-adjusted visitor spending remained 8% below its pre-pandemic level.
That gap helps explain the renewed focus on policies designed to encourage tourists to spend more while visiting Britain.
Nevertheless, tax policy represents only one part of the UK’s wider tourism challenge.
The WEF index suggests infrastructure, affordability, sustainability, and resilience increasingly shape a destination’s competitiveness.
Meanwhile, London’s second-place global city ranking demonstrates that Britain retains a powerful international tourism asset.
The challenge now lies in converting that appeal into stronger tourism performance and spending across the wider UK.
Photo by David Monaghan on Unsplash
