On the 23rd of June 2016, the UK government held a referendum in which they posed a question to the British public asking them ‘Should the United Kingdom remain a member of the European Union or leave the European Union’. The British public responded by voting to leave the European Union, with 51.9% of voters saying that the UK should leave the EU.
The European Union is a trade bloc, containing 28 member states, in which the member states are able to trade goods and services freely without any tariffs or quotas on the products. The lack of tariff on goods and services encourages trade and economic growth within countries. As well as free trade, being part of the EU, allows the citizens of member states to move freely without the need of passport, this has encouraged migration between citizens of member states of the EU. Which is why a number of people are wondering why we are leaving if there are so many benefits to the UK. In short, a majority of those that voted for the UK to leave the EU voted in that way for two main reasons; the first reason being the UK’s lack of control over our own borders and our loss of sovereignty, as well as the UK’s immigration issue. The Conservative government are now in negotiations with the EU on a deal which will take the UK out of the EU, however, the particulars of the deal are unknown, which has left a lot of industries wondering in what ways they will be affected by ‘Brexit’. This report will focus on the effect that ‘Brexit’ will have on the fashion industry.
There were numerous reasons why people voted for the UK to leave the EU, the main reason was for the UK to gain control of their borders, as the UK had to give up control of their borders once joining the EU to allow for freedom of movement. Once the UK leave the EU, they will gain back control of their borders and there will no longer be free movement of people and it will be more difficult for EU citizens to enter the UK. As before ‘Brexit’, EU citizens were allowed to enter the UK as they please as long as they had a visa, this was very beneficial to the UK fashion industry as it meant that UK clothing brands were able to source creatives from Europe due to freedom of movement. London Fashion week is the pinnacle of British fashion, showcasing the work of British designers that season for example Abercrombie and Fitch, Alexander White, David Koma and Good News, among others. The UK fashion industry employs 160,000 people, with a large proportion of those employed within the industry coming from Europe, these statistics goes to show the amount of people that will be affected if the UK are to leave the EU and the single market. These brands depend on the help of creative designers, photographers, videographers and models for help throughout fashion week as well as throughout the year and as ‘Brexit’ looks to be heading in a direction which will affect freedom of movement, it looks as if British brands are going to have to start sourcing their talent purely or mainly from the UK, which has its benefits and drawbacks. The UK fashion industry in 2016 contributed £20.92 billion pounds to the GDP and this increased to £26 billion pounds in 2017, however, uncertainty regarding the UK and its relationship with the EU in terms of trade and the free movement of people is certain to decrease the UK’s fashion industry’s contribution to the GDP
Being part of the EU allows a country numerous amounts of economic and social benefits, one of the main benefits includes the free trade of goods and services, meaning the UK can trade with other EU countries without any tariffs or quotas on the product. Tariffs and quotas being taxes on imported good. The free trade of goods and services meant that UK brands were able to import materials, clothes and resources bought from countries in the EU at a cheaper price. The UK leaving the EU will cause the price that UK brands pay for their materials and resources to increase, which could mean that they may try find ways to be more cost effective causing a decrease in the quality of the clothes made. The decrease in the quality of clothing could have a negative effect on the sales and demand as customers may not feel as though if the high end clothes are not of a certain quality no longer.
Although there are numerous negative impacts on the UK fashion industry as a result of the UK exiting the European Union, it could be argued that ‘Brexit’ may positively impact creatives, fashion designers, models, photographers and videographers that are in the UK. As Brexit will make it difficult for UK brands to source European talent when embarking on projects, talent shows and photo shoots, among another things, which forces them to look closer to home in UK for their talent. Brexit is expected to increase the amount of work that UK models receive in the UK, as it will be more expensive and difficult for UK brands to source talent from Europe. This puts a more positive light on UK exiting the EU, but will be a disappointment for those that work within the industry from European countries. As they may see the amount of jobs they get in London begin to decrease.
The period surrounding the build-up and eventual split of the UK from the European Union will affect the Pound Stirling negatively. As it is likely to devalue the pound, due to the decrease in the quantity demanded for the pound. The decrease in the quantity demanded for the pound means that it will be worth less, and UK brands will have to pay more for goods that they buy in Europe. Europeans coming into the UK will also be able to purchase UK fashion products for a decreased price as the pound will be worth less. Which may cause UK brands annual sales revenue and profit to decrease.
The news surrounding the UK leaving the EU is thought to have already negatively affected the UK economy with the OECD publishing reports regarding the UK’s productivity decreasing in 2016. Quoted saying that the UK’s productivity in 2016 was the lowest out of all the OECD’s leading economies. This goes to show the affect that just the news of the UK leaving the EU has had on the economy and industries. It is thought that the once the UK legally leave the EU, the effect on the UK economy is thought to be worse, leading UK fashion brands to brace themselves for what will come post ‘Brexit’. The negotiations regarding Brexit and the terms and conditions surrounding the UK leaving the EU are currently ongoing, so everything discussed in this report is merely speculation on what will happen, as it is still unknown the type of deal that Theresa May will bring back to the UK. All we know for certain is that the UK fashion industry is due to be affected by ‘Brexit’ due to the uncertainty surrounding the whole process. Hopefully the UK fashion industry will be able to recover from the fall that is likely to receive and get back to the heights that UK brands have reached in recent years.