After the EU summit in Brussels on 28 June, it is likely that both Germany and Greece will give ground. Germany in allowing the European Stability Fund to be used for a purpose that was previously an anathema.
Greece in accepting that the easing of its economic reforms is unlikely to make a difference to its dire straits.
The result is that Greece is still likely to exit the euro at some point before the markets force a decider with either Italy or Spain.
In such circumstances, fashion businesses trading in Greece, Italy, or Spain that have not planned for an eventual exit are playing with fire.
Contracts with businesses in these countries need to be reviewed. But UK brands are not doing so. They should ask themselves where their contracts are carried out or which country’s laws govern them. Nor have they considered what will happen if Spain leaves the euro and adopts the new peseta. Will their purchasers be able to claim force majeure?
Equally they haven’t considered their contracts with credit insurers. How robustly do agreements with insurers deal with buyers being in an exiting country? Do the insurers have a way out if a prospective exitee exits?
Ultimately if something’s got to give, you now have a short window to ensure it’s not your business.
- Stephen Sidkin, Chair of the Fashion Law Group at Fox Williams