The British luxury sector has warned of a loss in value of exports of £6.8bn per year to exports in the event of a no-deal Brexit.
New data from consultancy Frontier Economics, commissioned by luxury group Walpole, suggests that up to 20% of the current value of UK luxury exports could be at risk as a result of detrimental changes to market access in the event of a no-deal Brexit.
In value terms, the effects of a no-deal Brexit on the luxury sector could be a reduction of around £6bn per year in exports to the European Union and around £800m per year in exports to the Asia-Pacific region.
Changes in market access reflect changes to tariffs and non-tariff measures affecting UK exporters of luxury products. Non-tariff measures include health and safety requirements and environmental standards that apply to products. Divergences between the UK and export markets, or additional costs associated with having to demonstrate compliance once the UK is out of the single market, can penalise UK exporters.
The British luxury sector is export orientated: 80% of products are exported to overseas markets, the largest of which is Europe.
Helen Brocklebank, CEO of Walpole said: “British luxury businesses are committed to staying in Britain, but we are losing patience with the government taking us to the knife edge of no deal. The sector is thriving, but the cost to the UK economy in lost exports from British luxury will be nearly £7bn and we believe that money should be used to strengthen the country, not diminish it. We urge the government categorically to rule out no-deal exit”.
Michael Ward, managing director of Harrods and chairman of Walpole added: “Modern luxury is a true British success story – driving domestic employment, boosting tourism figures and showcasing the strength of our soft power on the world stage. We can now clearly see the devastating impact of a no-deal Brexit on the British luxury industry. The government must categorically take no deal off the table to prevent further damage to this important sector, as well as end the uncertainty which continues to stifle businesses across the UK”.