In the unlikely event that
you missed it, a
letter of significant
importance was delivered at the end of last month. This particular
letter moved one of the most drawn out political decisions in British history
into a new phase; Britain
is now officially leaving the European
Union.
In the aftermath of the
referendum result back in June of last year, the UK markets suffered with share prices and the strength of
sterling plummeting. This has led to challenging times for a variety of key
industries, including the automotive and travel sectors where hundreds of
businesses have been compelled to seriously alter or scale back their ongoing
operations. The same can not
be said for the export market which has seen exceptional growth.
"The amount foreign
shoppers spent with UK SMEs already rose 10 per cent year-on-year from January
to June 2016, the rate of growth then trebled to 34 per cent year-on-year from
July to December. Mark Brant, managing director at PayPal UK, said online SMEs
were well equipped to navigate the unpredictable market conditions following
the EU referendum result." 1
The UK fashion industry is a fascinating microcosm of these problems
with vastly contrasting fortunes for some of the biggest names in the industry.
It would be easy to simply write the fashion industry off as trivial, or point
to more dominant industries that will be affected such as banking or automotive sectors, yet it is hard
to ignore the £28billion that
the industry contributes to the UK economy each year.
Fashion experts are naturally concerned and have been lobbying the UK government
strenuously to protect their industry. Their focus is mainly on the long-term effects of Brexit,
such as the free movement
of people and the
potential loss of brands’ European headquarters of production within the
UK.
Both would limit the talent available to the fashion houses as well as
stifling innovation.
However, the short terms effects
of Brexit upon the value of sterling have been clearly evident; the combination of the weaker pound, and the
continued desirability of iconic British brands has led to numerous brands
flourishing due to their to their increased affordability for those from
outside of the UK. Walk around numerous cities across the continent and you
will be greeted with citizens of all ages donning luxury British items of
clothing, including Burburry scarfs and Lyle & Scott polos.
Conversely, brands such as Jaeger and Agent
Provocateur have struggled. Both firms have recently entered into
administration citing the devaluation of the pound as a major contributing
factor. The clear indication being that brands that are not reliant on imported
goods and manufacturing will thrive while the strength of sterling remains low.
It is therefore understandable the amount of intrigue that surrounded
‘the letter’ being delivered. Would it
cause further turmoil? Would it open
more markets for exporters?
Truth be told, ‘the letter’ seems to have little or none of the dramatic
effects predicted, with the markets essentially ignoring this latest
development. One thing that is for sure is that both the fashion and export
industries will be watching on carefully as the Brexit negotiations begin in earnest.
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