Brexit: How Will The Fashion Industry Cope?

Following the results of the referendum on the 23rd June 2016, the United Kingdom has become the first EU Member State to vote its withdrawal from the EU. The outcome of this referendum is what it is now commonly known as the ‘British Exit’ or ‘Brexit’. Brexit has placed the UK in a unique position; one that has been unprecedented since the establishment of the current European political and economical union (European Union).

Ever since the unparalleled vote took place, the UK Government has been working against the clock to decide how Brexit should take place. There has been an enormous amount of consideration put into how the UK will interact with the remaining 27 Member States post-Brexit. However, as has been extensively covered by the media, the main problem faced by the UK Government is the uncertainty, division and wavering opinion on how to achieve the best results possible, which it has yet to be agreed on.

The Fashion Industry

In an industry that is flourishing, it is not surprising that there is a concern about the effects of Brexit. Particularly, concern has been raised regarding how Brexit will affect the current policies aiding the apparel manufacturing and luxury fashion sectors, as well as other areas in which the fashion industry relies on e.g. international trade, education, taxation and migration of international talent. The fashion community has raised it’s voice on many occasions to express their dissatisfaction about Brexit (as 90% of the designers told the British Fashion Council they voted to Remain in the EU) and some even continue to rally against Brexit, such as Katharine Hamnett.

Wins and Losses?

Whilst opinions range from supporting a Soft Brexit deal (which would imply that the relations between the UK and the EU stay as close as possible) to even calling for a second referendum, the fashion community has made efforts to enter in conversations with the Government to ensure that this £28 billion sector continues to flourish following the March 31st deadline. Recently, the Evening Standard reported that one positive side of Brexit is the increase of international shoppers due to the decrease in the value of the pound, which has made it easier for the public to have access to more expensive and exclusive fashion and luxury products.

However, the higher sales may not be enough to cover for other losses. For instance, a potential loss in international talent may occur due to either the raise in tuition fees at fashion colleges and universities or potentially more complex and expensive immigration policies (e.g. the settled status application for EU that was initially proposed at a fee of £65; although the proposed cost has been now scrapped as of January 2019). At the moment, universities in general have not suffered a significant drop in application yet; however, other opportunities such as EU funds and the Erasmus scheme may not be available after Brexit, in which case EU graduates may not be able to benefit from the experience of studying (or interning) in the UK.

Apparel Manufacturing

The impact of Brexit in apparel manufacturing may see the return of products being made in the UK, as opposed to the more common practice of outsourcing to foreign countries. Notwithstanding this positive note, it is also worth mentioning that many of the workers which are being employed by UK manufacturers also have EU nationality, with a special emphasis to Eastern European countries, and, therefore, they may also suffer the inconvenience of a lesser flux of experienced professionals from these countries.

International Trade

International trade may become more costly for fashion and luxury companies due to potential increase in taxes and customs, as most of the materials originate from non-EU countries and intermediaries as often based within the EU. For this reason, should the UK leave the EU without a deal, UK manufacturers may suffer from a bewildering array of tariffs and the cost of clothing may increase as a result of this.

Concluding Remarks

It is not surprising that the fashion industry is very keen in supporting the decision of a UK-EU deal. As explained by Caroline Rush, chief executive of the British Fashion Council:

“The ongoing uncertainty and confusion that a no deal creates will have a negative impact on our industry, where investment is already impacted from the uncertainty being faced.”

Caroline Rush | Credit: Business of Fashion

There are still many options for the fashion industry to thrive against any potential setback following Brexit, as long as the UK enter into trade agreements with new and current international trade partners which could would yield major growth for these sectors. Immigration policies should be straightforward for ex-pat Brits and EU nationals reciprocally and competitive tax structures must be put in place for the benefit of both national and foreign investors. Lastly, new educational grants should be created in order to ensure qualified education programs receive necessary funds.

However, given the lack of consensus that still burdens the industry, only time will tell how the UK fashion community will overcome the uncertainty and be reborn once again, stronger and better.