Fashion and retail industry bodies are working to ensure the UK retains adequate trade agreements with countries inside and outside of the EU following the result of the EU Referendum vote in favour of Brexit and some leading retail chiefs have warned prices will rise as a result of the decision.
The British Retail Consortium (BRC) has said the top priority for Brexit negotiations would be the preservation of the trade benefits of the single market and also called on the government to move quickly to explain the process and repercussions of a departure from the EU.
“Without clarity, retailers, other businesses and hence the economy will suffer from a prolonged period of uncertainty,” the BRC said in a statement. “We are already seeing the commencement of a period of considerable volatility as financial markets react to any emerging information that might indicate how the new relationship to the EU might be shaped. Retailers should be prepared for the possibility of significant swings, particularly in the exchange rate and consumer confidence.”
Next chief executive Lord Wolfson, who was a prominent member of the Leave camp, has said that prices are likely to rise following the collapse of sterling but added that is not likely to happen immediately as many retailers will have currency hedges in place.
“Most retailers will have covered forward the balance of this year so [the fall in sterling] will not be reflected in prices this year,” Wolfson said to The Guardian. “Next has covered 60% of its requirement of dollars and euros for spring/summer next year and I imagine the rest of the industry will be in a similar position,” he added. “So the volatility in currency markets will have no effect until the spring, maybe the summer of next year.”
The BRC has said the top priority for retailers would be to ensure “continued ease and minimum additional costs of importing EU goods into the UK for sale to customers” but it too says the impact of any higher costs is not likely to be immediate and notes that the Brexit process will take at least two years to work through.
The UKFT which works with British brands to support their export to EU and non-EU countries said it would be urgently speaking to the government on behalf of the industry “to ensure new adequate trade agreements are negotiated with both the EU and non-EU countries including the US, India, China, Japan and Australia, as well as assess the knock-on effect on prices, consumer confidence and free movement of talent.”
British Fashion Council chief executive Caroline Rush, CBE, said: “As a not-for-profit organisation whose aim is to champion the British fashion industry around the world we are constantly working with a number of governing bodies to ensure the UK remains a leader in both fashion and the creative industries. We will keep doing this with all of our partners both at home and abroad.”
In reference to a recent survey of British fashion designers in which it was revealed that 90% preferred to remain in the EU, Rush said there had been “an overwhelming support from our designer survey for the UK to remain in Europe and there will no doubt be upset and dismay at [the] result that will prompt an outreach to our friends, partners, business colleagues in Europe. We now have a role to play in keeping the Government updated on our industry’s priorities and keeping the designer community updated on any likely impact to business as our country prepares to leave the EU over the coming years.”
Turmoil at the top of both political parties is likely to make any short-term negotiations with the government very tricky but chancellor George Osborne did move to calm the markets this morning and retracted his claim prior to the Referendum that a post-Brexit emergency budget would need to be activated.
“I said we had to fix the roof so that we were prepared for whatever the future held. Thank goodness we did. As a result, our economy is about as strong as it could be to confront the challenge our country now faces,” he said.
Osborne also reiterated David Cameron’s position, stated when he resigned on Friday, that the UK did not need to invoke Article 50 (officially serve notice of its departure from the EU) until the autumn when a new Prime Minister could be appointed. Until that point all trade agreements remain in place.