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Wednesday, June 30, 1999 Published at 21:07 GMT 22:07 UK


Business: Your Money

Duty-free ends in EU

No more duty-frees but cut-price shopping for travellers will continue

Duty-free shopping within the EU finally came to an end at midnight on Wednesday after eight years of wrangling by manufacturers, ferry companies and airports who have predicted large-scale redundancies.


Rory Cellan-Jones: Travellers will still get bargains
Campaigners for retaining the £4.5bn ($7.2bn) industry said it was a "very sad day for consumers and duty-free traders".

They said lower levels of duty in other EU countries meant that there could be a huge influx of relatively cheap goods into the UK from the Continent, hitting manufacturers already struggling from the strength of sterling.


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The world's biggest duty-free trader, BAA - which runs the UK's main airports - says it will maintain duty-free prices on 90% of goods for EU travellers in an attempt to retain sales.

But cigarettes and some spirits will be excluded because BAA says the price differential is too great for it to absorb. Even so, BAA says its profits could be down by as much as £70m ($112m) over the next two years.

The supermarket chain, Asda, says people will be better off buying at home before they travel as its prices are "consistently lower" than those in duty-free shops.

Good for shoppers

The reaction of the Consumers' Association is "good riddance" to duty-frees. It says shoppers will be better off in the long-run.

Kim Winter, managing editor of "Holiday Which?" magazine said: "Duty-free was a distortion of the EU single market and for that reason we are happy to see it go.

"Consumers are much more sophisticated now and the majority already knew that it was cheaper to buy their alcohol in the hypermarkets on the Continent, just as they know that clothes and other goods are also cheaper there and in the US.

"The duty-free traders made vast profits and the fact that they are willing to absorb the duty and VAT after abolition shows that they were just crying wolf."

She said: "It must also be remembered that duty-frees will still be available to travellers going outside the EU, so 60% of passengers leaving the UK will still be able to make duty-free purchases."

Ferry operators say they face big losses and, unlike airports, do not have much trade from journeys to non-EU countries to fall back on.

But they do have one big advantage. They can charge the duty of the country whose waters they are sailing in, so once they hit French waters the prices will come down from those charged in the UK.





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