A few days ago British people went to the polls to cast their votes on whether the UK should ‘leave’ or ‘remain’ in the European Union. Unfortunately, the majority of UK opted for leave. A ‘Brexit’ would destroy the pound, negatively impact consumer confidence, upend trade regulations and threaten the free movement of talent — all of which would be a disaster for the fashion industry in the UK and globally.
A number of British government organizations, notable individuals (Obama) and governments and corporations have warned of the fallout of the Brexit. Last week, the G7 stated officially — which includes the US, Canada, France, Germany, Italy, Japan and the UK — declared that Britain’s exit from the European Union would pose a "serious threat to global growth.
British chancellor of the exchequer, George Osborne , said that the Brexit would cause an "immediate and profound" economic shock and could send the UK into a recession and leave the country "permanently poorer" with an economic contraction of 6 percent by 2030.
So how does this whole economic hoopla affect the British Fashion industry? Let us break it down for you. Many experts like Euromonitor stated that the Brexit would be bad for the fashion industry — not only in the UK, where fashion contributed an estimated $38 billion to the UK economy in 2014, but across the world.
It will significantly impact the bottom line for British Fashion Businesses, as many outsource production to countries, where they pay in dollars. British clothing and home furnishing retailers source about three-quarters of their goods from Asia (IBS. 2105) "A weaker pound would make these deals more expensive, resulting to the British businesses to either shoulder the costs, or have higher prices for their products."
On the other hand, "British fashion companies that do a significant volume of their sales abroad (i.e Burberry) could experience a some profits only if their costs are largely in pounds, but their revenues are in euros or dollars, the euros and dollars they would get from abroad would buy a larger amount of pounds". (BOF. 2016)
The falling pound could also make tourism to the UK more affordable, boosting tourist spending in cities like London, a key destination for the travel retail sector. But by the same token, a weaker pound may force international brands to increase their UK prices, eating into any gains.
What's clear is that a Brexit would create more uncertainty in a world already plagued by growing global risk, further undermining consumer confidence. Certainly, among British consumers. According to Euromonitor, “there would be a reduced confidence in their own wealth,”. This could mean that there will be a limit to the Brits’ willingness to spend both at home and abroad — especially as shopping abroad, in stronger currencies like the dollar, would also become more expensive for Britons.
If Britain were to exit the EU, the resulting changes to trade regulations would also have major consequences for thousands of fashion companies- like trade taxes. Any additional duties, anything that is blocking the trade of goods is a bad thing for the fashion sector.”
Due to its membership in the EU, the UK currently enjoys favorable terms with more than 60 nations. To continue the ease of trade flows and maintain these terms, the country would need to quickly negotiate new agreements with both the EU and non-EU countries including the US- ASAP!!
For London’s world-renowned fashion schools, the Brexit will halt the benefits from EU investment in the form of research funding and initiatives that support innovation and bring together fashion designers, manufacturers and technology partners from across Europe. I was speaking to a former classmate of mine in CSM who chose to be anonymous, he's currently taking his masters and he's from Germany.
Students from the EU, will no longer pay lower tuition fee than other international students. This will lessen the likelihood of these schools attracting the best creatives in EU. Many of these students have also decided to stay and continue their careers and busineses in the British capital. Some of the most exciting designers featured in London Fashion Week are EU immigrants to the UK, Roksanda Ilincic, Marques’Almeida and Mary Katrantzou. These designers are continuously enriching London as a hub for fashion innovation and design.When I asked about how Brexit will affect students, he just emailed "FFS". Followed by, "I'm panicking, I dont know whether my tuition fees will increase." He currenlty has two parttime jobs and taking another one will compromise his studies"
The EU’s open borders have also made it easier for companies like Paris-based Céline to operate on London and Paris (creative director works from its London office). It is likely that once the UK got out of the EU, the brands are probably having second thoughts about establishing their headquarters or their creative departments in London. Loewe operates in Spain and London
While a Brexit would not result in all the Europeans who were coming to the UK with visas having to return to Europe. No one knows or determine how leaving the EU would impact the free movement of people in and out of the UK. If the rules regarding movement of EU and Britons between two entities are less favorable or stringent, industries such as fashion will be affected. Reports of Game of Thrones' production costs will be increasing.
In a nutshell, The Brexit would weaken the pound, negatively impact consumer confidence, upend trade regulations and threaten the free movement of talent — all of which would be bad for the fashion industry, both here in the UK and globally.
Why did majority of the Britons choose to abandon the EU? How come the topmost topics searched in UK after the vote was "how will the Brexit affect us" and "what is the EU". #Facepalm. Were they brainwashed? Did they know what they were getting themselves into? How will it affect the rest of the Global economy. Who knows? I'm just here waiting at this corner of the world waiting with bated breaths.
To better understand the Brexit and the stupidity of it all, watch this clip from John Oliver. It's not boring , I promise.