A Bad Brexit Would Pull the Fashion Industry Apart at the Seams
As the UK negotiates its exit from the EU, it must remain in the customs union and introduce new trademark protections, talent visas and tax breaks, or risk disaster, argues Tamara Cincik.
LONDON, United Kingdom — A great many people all over the world have at least something in their closets that’s been conceived by a UK-trained designer or sold by a UK-based retailer. If industries were nations, then fashion would represent the seventh largest economy in the world and what happens in one part of the industry has effects across the entire ecosystem.
I have worked as a fashion stylist and editor for 20 years, only more recently delving into politics. But I can say definitively that, as the United Kingdom negotiates the terms of exit from the European Union, one thing is crystal clear: a bad Brexit would pull the fashion industry as we know it apart at the seams.
If the UK leaves the European Union without an advantageous trade deal, thereby defaulting to the basic rules set by the World Trade Organization (WTO), the cost of clothing purchased in the UK would rise dramatically, decimating spending. Currently, London is enjoying a consumer tourism boom, as visitors capitalise on designer bargains created by the British pound’s post-Brexit drop. Indeed, the currency remains stubbornly low, down 16 percent since before the EU Referendum. But this won’t last once the resulting rise in manufacturing costs is passed onto buyers. There goes London’s global position as a luxury shopping destination.
Make no mistake, fashion needs free movement of goods and services between the UK and Europe. I campaigned for ‘Remain’ during Britain’s EU Referendum last year and still view those freedoms as best for the fashion business.
But even if the UK does leave the Single Market, as looks very likely, I believe we must still stay in Europe’s customs union for all of the links across the fashion industry’s value chain to thrive. Turkey, for example, is in the customs union, but not inside the EU; their agreement has boosted trade growth to four times pre-agreement levels. Fashion needs a red tape overhaul. No one wants a return to an era of time-intensive documentation for every delivery between Europe and London.
Done badly, Brexit will bankrupt many, lead to a brain drain and leave the UK a tax haven with dubious factories and a weakened London Fashion Week.
Fashion is a business built on globalisation: it’s an international supply chain, with items running in and out of different countries to be designed, manufactured, embellished, packaged, marketed and sold. The UK is the EU’s largest importer within the group, with consumer buying power that is rising 6 percent annually. Fashion and apparel exports to Europe are worth £1.8 billion ($2.3 billion) annually.
If a Brexit deal cannot be struck, it would not only sound a death knell for the UK fashion industry as we know it, but would decimate entire supply chains, from Bulgaria to Bangladesh, as products like thread, fabric and buttons are all whacked with a 25 percent tax hike.
I think the best solution would be to keep tariffs at zero, as in Hong Kong. Both the Labour Party’s Keir Starmer and the Conservative Party’s Matt Hancock have said this is viable. This would also circumvent the EU’s sticking point that staying in the Single Market must be coupled with freedom of movement and that this is non-negotiable. Whatever Brexit does ultimately mean (the unknown elephant in the room), this seems the best way to avoid economic suicide.
We also need recognition of our intellectual property rights and trademarks, transferrable mutual recognition between UK and EU trademarks and protection of unregistered designs, to avoid rip-offs saturating the market once the UK does leave the EU. Currently it is not possible to trademark for both zones.
International fashion students in the UK pay three times what EU and UK nationals are charged. The Conservative Party wants “the brightest and the best to continue coming to the UK.” Perhaps not expelling them on graduation might encourage this. Fashion students should not just be used as a cash cow for colleges, but also encouraged to build their post-graduation businesses in the UK. Many feted British designers are immigrants. Why train talented people to then ask them to leave on graduation? I would propose a two-year visa extension for graduates, allowing fledgling talent to develop and grow businesses in the UK.
Done badly, Brexit will bankrupt many, lead to a brain drain and leave the UK little more than a North Sea tax haven with dubious factory practices and a much weakened London Fashion Week. Done well, with a considered strategy on talent visas, access, tax breaks, trademarks, support for SMEs, tech and skills education, and we could see this as the turning point towards sustainable growth with a global vision.
So while I campaigned for ‘Remain’ and I wish that David Cameron had not played Russian roulette with the UK’s future in the EU to appease the far right of his own party, it is vital now, a year on from the EU Referendum, to lobby for the best case Brexit for the global fashion industry. Let’s come together as an industry and push for clear strategies. After a year of what if’s and unknowns, we simply cannot leave everything we hold dear to chance and politics.
Tamara Cincik is a stylist and fashion politics consultant who has worked with members of the UK Parliament.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.