Unhappy consumers? Fashion prices to surge under no-deal Brexit - study
today Jan 11, 2019
As the chances of Britain crashing out the EU without a deal remain strong, a new study has suggested that fashion prices could rise by as much as 11.5% as a result.
Consumer research and personal finance specialist NimbleFins has researched World Trade Organisation (WTO) tariff rates rates for European fashion and also found out which EU countries send the most clothing and footwear to the UK.
If the UK leaves the EU without a deal, then the trade between the bloc and UK will fall under international trade rules set by the WTO. In that case, imports and exports between the EU and UK will be subject to Most Favoured Nation tariffs and it could take some years to negotiate more favourable trade deals.
The company said that would mean clothing from the EU could cost 11.5% more and EU-sourced footwear prices could rise by 4.1%. The most popular fashion imports to the UK come from Italy, followed by Germany, the Netherlands, France and Belgium.
NimbleFins said that “it's safe to assume that most if not all of the tariffs will be passed on to consumers, otherwise retailers would take a massive hit to their profit margins.”
The 11.5% figure is actually an average and the study showed that some clothing prices (coats, dresses, shirts and sweaters) could rise by 12% on items imported from the EU.
But just how much does Britain import from EU countries? At the moment 30% of its clothing comes from them, adding up to £6 billion compared to £20 billion from the rest of the world. And half of the UK’s footwear comes from the EU, adding up to £2.6 billion compared to £5.3 billion from elsewhere.
Of course, in a world of noticeably higher prices, those percentages could be likely to change, denting export figures for Italian, German, Dutch, French and Belgian firms.
But the big questions are whether UK households would rein-in their spending, whether retailers would shift their buying to other markets, how much weight they would have in price negotiations with European suppliers and just how big a chunk of the higher prices they would pass on to their customers.
The answers to these questions are unknown as yet, but companies in some European markets must be more concerned about them than others.
At present, Italy is the most exposed to a ‘hard Brexit’ as 19% of the UK’s clothing imports and 21% of its footwear come from there. Germany sends the UK 16% of its clothing imports and 18% of its footwear, while for the Netherlands the figures are 14% and 20%. For France, they’re 14% and 9%, while for Spain they’re 9% and 6%. Belgium is responsible for 8% of the UK's clothing imports and 15% of its footwear.
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