Brexit: a Stain on the Fashion World

Brexit: a Stain on the Fashion World

As the March 2019 mandate approaches, London fashion prepares for losses.

As the March 2019 mandate approaches, London fashion prepares for losses.

Text: Stephanie Ge

When the U.K. voted in favor of Brexit in 2016, it became the first country in 60 years to pledge to withdraw from the European Union, and by far the largest economy ever to do so (fellow defectors include Greenland and Saint Barthélemy). According to a recent report by the Business of Fashion, 90 percent of British designers voted to remain in the Union, and it’s not hard to see why: five months before Brexit is slated to take full effect, London is now one of the lowest-valued luxury markets. With a fluctuating pound and business taking a big hit—never mind the intolerant rhetoric used to support the isolationist mandate—Brexit is already a raincloud over London fashion.

Despite prevailing anti-Brexit sentiment in the fashion industry, the marketplace is girding its loins for March 29, 2019, when Britain will officially cut ties with the EU. While London is hailed as a fashion capital, the increased tariffs that are likely to result would impact British fashion houses big and small.

BOF spoke to Richard Lim, chief executive of analyst Retail Economics, who forecasts three possible scenarios for how Brexit will play out in the fashion industry. In the first scenario, which Lim calls “Hard Brexit,” designers, retailers and manufacturers will lose their trade deals with the EU, resulting in clothing and footwear tariffs of 11 percent and $1 billion in taxes. The second a fair trade agreement, but Lim says this will be difficult to negotiate, as the risks attached are unclear. A third albeit unlikely scenario is that the U.K. remains part of the customs union, a path that has already been rejected by Prime Minister Theresa May.

May’s anti-immigration policies, in addition to the tariffs, will measurably drive up costs for manufacturers and consumers. The British fashion industry employs an estimated 10,000 non-citizens, and retail prices are bound to reflect increased manufacturing and distribution costs that result from stricter border control and a shrinking employee pool.

As a kind of silver lining, Brexit may lead to more retail tourism as the value of the pound drops. Luxury brands such as Burberry have already seen an influx of Chinese, Arab, and American consumers shopping top-tier goods. But these sales are far from guaranteed to offset rising manufacturing costs. One expert from the organization Ready for Brexit cites everything from importing raw materials to transporting finished runway samples as variables that Brexit will affect.

As insular as London fashion may seem, the current fears within it reflect a global trend: that perceived progress (ahem, U.S.), however hard-won, can easily regress under political division and poor diplomacy. As a former Matchesfashion.com COO tells BOF, the London fashion scene was only just hitting its stride. “[This] loss cuts through all aspects of our industry —stores, businesses and carefully nurtured brands, and the freedom to move,” they said. “Don’t let’s lose our place again.”

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