16 Dec 2020
Posted in Retail
Trading with EU under no-deal Brexit will be pricey for UK fashion firms
As the UK tries to hash out the final terms of its departure from the EU, the thought of Prime Minister Boris Johnson walking away without a deal is a worrying one. UK textile and fashion firms should now be weighing up other markets to potentially trade with, says GlobalData, a leading data and analytics company.
Hannah Abdulla, Apparel Correspondent at GlobalData, says: “Brexit talks have reached a critical point and the UK fashion industry is clinging onto the hope a deal will be clinched at the last minute. With many businesses just about surviving the COVID-19 pandemic, having to contend with a no-deal Brexit may well be the straw that breaks the camel’s back.”
Tariffs associated with trading under World Trade Organisation (WTO) rules mean it could cost almost a billion pounds more to trade with the EU in the event of a no-deal Brexit, according to calculations by the UK Fashion & Textile Association.
Almost 75% of UK fashion and textile exports go to the EU so there are repercussions for EU fashion businesses too. For clothing and footwear retailers reliant on EU supply, the WTO terms would mean increased scrutiny at ports and borders, which could lead to more paperwork and significant delays.
Abdulla adds: “UK textile suppliers need to start looking beyond EU shores to other countries the UK has trade deals with. Currently, 29 of 70 existing deals the UK was automatically part of with the EU have been rolled over for 2021, including major garment manufacturing hubs such as Vietnam, Tunisia, Egypt and Morocco, and just this week, Mexico. Talks with the US, Australia and New Zealand are ongoing.
“It’s important that businesses are proactive in seeking alternative trading opportunities in order to minimise disruption.”