The retail industry has expressed concern that the proposed Brexit deal may not pass through parliament, extending uncertainty for business.
Despite prime minister Theresa May announcing a draft agreement had been backed by the cabinet on Wednesday, the government has been in turmoil since.
Seven politicians have resigned in protest at the proposal, including Brexit secretary Dominic Raab and pensions secretary Esther McVey. Several MPs are calling for a vote of no confidence in the prime minister.
The fallout is prompting speculation that the current draft will not pass the vote, which is expected to take place on 7 December, and increase the risk of a no-deal Brexit.
The value of sterling dropped 1.7% yesterday as ministerial resignations were announced.
Adam Mansell, CEO of the UK Fashion and Textile Association, said: “From a business perspective, the draft withdrawal agreement provided much-needed clarity and would have allowed the sector to plan for at least the next two years. However, the current political situation means the future of the agreement as it currently stands is precarious at best.”
Negotiations are yet to begin to establish a trade deal with the European Union though the draft proposes a “free trade agreement”. If the agreement is passed, negotiations for this will begin after 29 March 2019, and the UK will remain in the single market and customs union until the end of the transition period of 21 months.
“The commitment in the political declaration on the future relationship to deliver a free trade area with no tariffs was very welcome. However, the detail of any new relationship will be very important,” Mansell added.
In the event of no deal, the UK would immediately leave the single market and customs union, and revert to the World Trade Organization rules, under which tariffs would be levied on imported goods from the EU.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Until an agreement is approved by both parliament and EU member states, we have continuing uncertainty and the risk remains of consumers facing higher prices and reduced availability of products in March 2019.
“We need to secure a withdrawal agreement that can protect frictionless, tariff-free trade throughout the transition period.”