The chair of Burberry has called Brexit a “drag on growth” and asked Prime Minister Rishi Sunak to reverse a decision to remove tax-free shopping for tourists that has left Britain nursing the “weakest” Covid-19 recovery among its big markets.

Gerry Murphy, the chair of the £10 billion trench coats to handbags fashion house, told the prime minister that a decision to remove VAT refunds in 2020 has hurt the economy and was a “spectacular own goal”.

Speaking from the audience at an event for business leaders organised by the government in London, Murphy labelled the decision — made in 2020 by Sunak when he was chancellor — as “somewhat perverse” and that it had made the UK the “least attractive shopping destination in Europe”.

He said Burberry, the UK’s largest fashion brand, had analysed sales data across Europe, including in Paris, Milan and Munich and that Britain was showing “by far the weakest recovery” from Covid-19 of its big markets. He said Britain was “actively exporting business as a result of that policy to our continental competitors”.

Murphy told Sunak: “I would ask you in the spirit of making Britain a more competitive environment, in the spirit of fostering growth — and not just in the luxury industry, but also it knocks on to travel to hotels, airlines airports — to reconsider that decision.”

Murphy, who has chaired Burberry since 2018, said it had warned the Treasury of the impact of the policy, and that was playing out as tourism returned after the pandemic.

Murphy said: “I would ask you and the chancellor to revisit this. It was a bad decision made for the right reasons. I understand the fiscal imperatives, but we would urge you to look at this.

“Leaving the EU has had a significant friction effect on trade — hopefully not forever — for all the reasons you mentioned. But it is the case that’s a drag on growth. So we would ask you to look at this specific one. This is a spectacular own goal, and it can be reversed by a decision from you or the chancellor.”

Sunak said the government was “here to listen” and that he would take Murphy’s comments away.

At the same event, the chancellor, Jeremy Hunt, defended the decision to remove the VAT refund and said it had saved the UK about £2 billion.

Hunt said: “I will look at all independent evidence about the impact. All things being equal, I want to attract tourists to the UK, and I want them to spend their money in the UK rather than the other places, so I completely understand the competitive issues that arise.

“But at the moment, the evidence is that that would be an expensive thing to do, which would mean taxes would have to go up.”

Murphy thanked Sunak for hosting the event, which attracted 200 business leaders, and said it showed that the government was “more business-friendly than some predecessor administrations”.

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