LONDON, United Kingdom — At the London’s womenswear shows, there’s one issue looming large over the proceedings: Brexit. In early January, Prime Minister Theresa May outlined a 12-point plan for the UK's departure from the European Union, that included leaving the European single market and its customs union, controlling Britain’s borders more closely and implementing new tax structures, suggesting that a “truly global Britain” would replace a Britain tethered to Europe, but the long-term impact on the local fashion industry remains far from clear.
“It’s a big worry. I just really don’t know, because it’s kind of obscure at the moment. We don’t know what is going to happen,” designer Emilio de la Morena told BoF ahead of his London Fashion Week show. “My biggest problem is the price of the garments,” he added. “I buy all my fabrics, apart from a few wools, in Italy and France mainly, and I’m worried about how that is going to affect our prices. How are we going to be competitive?”
It’s a view shared by fellow designers Eudon Choi, Daniel Fletcher and Dominic Jones, creative director at jewellery brand Astley Clarke, who have already seen the cost of production rise due to the decline of the pound.
“I worry that the implications of Brexit are enormous and most of them aren't actually known yet,” said Choi. “Every business sector in the UK will be affected by this enormous change and it worries me that the fashion industry may not be at the top of the priority list.”
“A bad trade deal could make the collection too expensive for [European stockists], an increase in import and export duties could mean I may not be able to work with my international suppliers or that I will have to raise my prices and jeopardise future orders from these stores,” lamented Fletcher.
Fashion designers and businesses say they are already seeing the effects of uncertainty on their business from employees leaving to return to the European Union to the knock-on currency effects from importing and exporting goods.
“A lot of what we sell is exported, so in the short term, British made products have become cheaper for export,” said Christian Murphy, the founder of manufacturing firm Albion Knitting Company whose clients include Chloé and Gucci. “It’s a short-term benefit.”
However, what Murphy gets from exporting his British-made goods at a lower price, also impacts the prices he pays for European imports. “We buy a lot of yarn from Italy, which is priced in euros. So you are robbing from Peter to pay Paul. For me, the currency has not been a significant factor, but we are paying more for our yarn and it comes full circle.”
It’s an experience shared by many in the industry. “It has eaten into our margins in a big way,” said de la Morena, describing how the fall in the pound had impacted the cost of his raw materials he imports from Europe. “We have been looking at buying fabrics in the UK, but that’s not viable.”
It has eaten into our margins in a big way. We have been looking at buying fabrics in the UK, but that’s not viable.
Choi, whose designs are sold largely outside the UK through international stockists, worries that the effect could be enormous on his business. “Access to the single market is imperative for UK fashion businesses if they are to remain competitive,” he told BoF. “A weaker pound should in theory make my pieces more affordable for European and US retailers, so we will have to wait and see if Brexit will translate into greater sales to offset my increased production costs.”
Last year, the European Union accounted for 74 percent of UK exports, making it Britain’s biggest export market for textiles and apparel. Additionally, the value of its apparel and textile exports was reported to be worth £9.1 billion in 2016, up from £8.5 billion in 2015.
“As a young brand, working with wholesale stockists is already difficult enough and margins are extremely tight, increases in import and export duties could have a huge impact on my business, said Fletcher.
“Idealistically and maybe naively I am hoping the government will be able to negotiate a deal which doesn't change how freely we are able to trade with Europe, or at least try to protect the interests of start-up businesses.”
Maintaining the working rights of EU nationals is another issue concerning Britain’s fashion industry, particularly as many of the skilled workers who form the backbone of design studios are European and international citizens.
Jones said he had seen first-hand the impact uncertainty around Brexit has had on his team. “Eve, who is my right hand in the design team is French. It has been personally really hard for her, emotionally the feeling of rejection and potential instability in a job she had mentally felt so secure in previously,” he told BoF.
“Financially it has equally been really hard for her as she has a mortgage that she’s paying off back home and the drop in the value of the pound has cut a real value off her wage. She’s a member of staff I consider invaluable and it’s incredibly frustrating for me personally the idea that she may feel anything other than of value within our country and our industry.”
“A big concern for us is our staff,” said Murphy. “If we go for a hard Brexit and the government is not able to secure the right to work for EEC citizens in the UK, potentially we could end up losing a third of our workforce… As a manufacturer and as an employer, its something you have to wonder about.”
In a recent report by a British industry group, more than a quarter of employers in Britain say that their staff members from other European Union countries have considered leaving their companies or the UK this year after its vote to leave the European Union in June. The Chartered Institute of Personnel and Development (CIPD) also said that recent official data showed employers who rely heavily on EU migrant workers were struggling to fill posts in retail, wholesale and manufacturing.
If the government is not able to secure the right to work for EEC citizens, we could end up losing a third of our workforce.
The British Fashion Council (BFC), which represents the interests of the fashion industry in the UK, said in a statement that since the vote it has engaged directly with government, as well as organisations like the Creative Industries Council and the Creative Industries Federation to ensure the views of the creative sector are heard and presented in “one coherent message.”
“The best deal is as close to business as usual, in terms of the EU,” Caroline Rush, chief executive of the British Fashion Council told BoF. “But we have no assurances that that’s the case and so with that in mind, is really having an understanding about what the reality is going to be so that as businesses can really plan for it — across the board, not just in fashion industry. That uncertainty around what the deal is going to be is causing lots of people to press pause on making decisions, planning and development and forecasts for growth and everything else.”
Addressing the fashion industry in a speech at the start of London Fashion Week at its new venue, The Store Studios, Rush reiterated the importance of recognising fashion’s concerns about visas, attracting and retaining talent, trade tariffs and intellectual property to the government.
“I’d like to take this opportunity at the opening of London Fashion Week, a showcase of predominantly British talent and a brilliantly positioned event for the UK as global leader in creativity, innovation and business, to remind the government that retaining our competitive position isn’t straightforward and we hope that you’ll listen and understand our concerns and our needs. We are worth £28 billion to the British economy each year, 880,000 jobs and are an industry that repeatedly exceeds the figures for national average growth.”
Since the outcome of Britain’s vote, the BFC has hosted six roundtable discussions with representatives from 82 British-based designer businesses and public relations firms, which have helped it form the key issues it plans to prioritise in its negotiations with the government.
While the BFC still has a long way to go in helping to negotiate a possible early sector deal, post-Brexit demands from the fashion industry include a review of immediate tax incentives for companies based in the UK — to help provide assurances to business owners, investors and potential employees — as well as government support for industry-wide strategies it may want to implement to help drive further growth.
Other considerations include speeding up decision-making around planning issues as a whole, investment in skills and training for the fashion industry, protecting intellectual property rights, providing incentives to use renewable energy and commitments around transport and infrastructure to ensure industry investments are spread across the country.
In spite of the challenges that remain, some businesses and entrepreneurs plan to make the best of the situation and the possible opportunities that may arise from being outside of the EU, said Rush.
“On the upside, businesses and entrepreneurs are trying to look at what the opportunities might be,” she said. “So what tax incentives there might be, what deregulation there might be that actually allows businesses to benefit from being outside the EU and so whilst we are initially looking at challenges around exiting the single market, we will also be looking at... what the best deals might be in terms of opportunities as well.