There are growing fears that the UK’s status as a hub of innovation in fashion and textiles manufacturing is under threat from the implications of a ‘no deal’ Brexit.
“The estimated cost to the UK’s fashion and textiles industry in loss of revenue under a no-deal scenario would be £900m [$1.08bn] in the first year alone,” said Stephanie Phair, chairman of the British Fashion Council (BFC), on September 13 during the opening ceremony of London Fashion Week. This is likely a conservative figure as there are still so many variables unaccounted for.
Earlier that month, the BFC, various industry leaders and government officials met to discuss what a ‘no-deal’/World Trade Organisation (WTO) trade deal situation would actually mean, and what preparations were necessary to maintain stability.
A lot is at stake. The sector is growing three times faster than either banking or technology, with a projected value of £76bn in GDP by 2023, according to figures from Mintel and the BFC. Meanwhile, figures from greenfield investment monitor fDi Markets show the UK’s competitiveness in textiles manufacturing has been rising. Between 2013 and 2018, the UK surpassed Bangladesh and Italy, and equalled Turkey and France, in FDI into textiles manufacturing.
But if the UK leaves the EU without a deal on October 31 it could hit the UK textiles industry hard in three areas.
One is operational costs. Many designers import fabrics and textiles made in Italy, and manufacture the clothes in the UK (predominantly in London and the Midlands region). Under WTO conditions these would attract an estimated tariff of up to 32%. There are also the export tariffs that designers would have to pay when they export their garments back to stores in the EU.
Another area is the impact on talent and workforce. The UK fashion industry recruits heavily from the EU for operational and design jobs, so retaining and attracting talent would hit an immediate barrier as UK loses accessibility to this human capital.
The combination of these two factors could cause a third, equally damaging effect. Some warn that UK production could collapse as designers move production onto the continent to stay within the EU single market, which would put at risk the entire UK value chain of some 890,000 jobs.
Michael Halpern, a UK-based designer showing at London Fashion Week, said: “My factories are in London. If we leave without a deal, I won’t just have to shut down production in the UK, I’ll have to move my whole business onto the continent. Suddenly, I’ll have to pay taxes on thread, dye, basic materials. My operational costs are going to go up with the arrival of tariffs.”
Absorbing the costs of new tariffs rather than passing them on to consumers via the retail price is an unsustainable option for the independent designers that have been fuelling this renaissance in British manufactured goods, Mr Halpern added.