Brexit was highlighted by every newspaper in the world.
Queen wore the EU flag to announce the exit.
We think she was mourning the loss of UK Fashion Industry!
It came as quite a shock when more than half of the people decided to vote for an astonishing exit from the EU, that too in the times when most of the countries of the world are wishing to become its member to enhance their trade opportunities. The debate is unending. Most of the analysts believe that it was a sane decision while the other school of thought gives out unending statistics about how the decision was plain stupidity.
However, only one thing is apparent for now is…
Thanks to Brexit the Fashion Industry of UK is going to undergo a major failure.
It is believed that EU exit will prevent free trade which means that the free movement restrictions will prevent the access to the top notch talent which would eventually slow down the overall economy growth. The research by Creative Industries Federation (CIF) highlights the damaging and brutal effects of trade barriers on the fashion industry.
That’s how it works…
The fashion industry is solely breathing at the mercy of the internationally hired freelancers. They not only give out their talent in the exceptional way but are also available to work at last minute projects and are good at meeting deadlines. Losing the access to the crucial EU based talent is going to damage the growth of industry beyond repair.
The mere announcement of Brexit caused a slide in the currency value. The recent report indicates that this put the overseas buyers at an obvious edge because they can easily afford to buy themselves the luxury items straight out of the heart of London. The consumer rights however remain unchanged even if the market is going upside down. The overseas people are still entitled to all the same rights under the EU consumer protection legislation.
There is a silver lining to this fiasco in the form of boast in UK fashion retailors due to Irish operations within the market. But this isn’t going to long lived. Fashion analysts have already raised alarms about a possible recession that is going to rip the market apart. The investors are for sure going to lose their confidence in the stock market and prices will soar.
The one who will suffer the most are the British focused fashion retailors. The increase in overall trading prices and localized selling will be costly and will likely curb down the sales. However, the online luxury brands like Primark, ASOS, etc. will witness benefits. Of course, the huge retailers will have to use the shield of tax hedging to protect oneself.
Perhaps the most dangerous thing out there is: unpredictability of the market.
Fashion business owners and analysts are looking at the foreign exchange policy and trends in economy to adjust to the future but are in vain. The companies cannot come up with hedging policies to guard themselves or even to save their neck because they don’t know where the fashion industry and its growth is headed.
In summary, the only solution the fashion retailors are left with would be to transfer the increased cost to the consumer through charging higher prices. The sane approach in this regard would be to devise a thorough trading policy with EU that is fashion industry specific before 2019 when the official separation is scheduled. Otherwise the chances of survival look bleak and it is going to be contagious in nature as it will give birth to more parasites of unemployment, depression, social harms and fashion lag in the society.
Trick is to cure the disease before it lays eggs.