- UK Parliament votes down Brexit deal in stinging defeat for Prime Minister
- British Fashion Council throws its weight behind a public vote on the final Brexit deal
- Harrods says building Spring Summer stock to manage Brexit uncertainty
- Prime Minister Theresa May to face no confidence vote, vows to bring new deal
LONDON, United Kingdom — The British Fashion Council is pushing for a second referendum on the UK's departure from the European Union, following on from a stinging defeat of Theresa May's Brexit deal in parliament Tuesday.
In an uncharacteristically strong statement issued after the results of the vote were announced, the industry body announced its support for a so-called "people's vote." The BFC has repeatedly highlighted the negative impact Brexit — and particularly a no-deal Brexit — could have on the sector.
The announcement comes after parliament definitively voted down Prime Minister Theresa May’s proposed deal for the country to leave the European Union, raising uncomfortable questions for the country’s roughly £30 billion ($38 billion) fashion industry.
The deal, which would have laid out the terms of Britain's divorce from the bloc, was defeated by a resounding 230 votes — an unprecedented loss.
The defeat prolongs uncertainty that has hung over the UK economy since the country voted to leave the European Union in a referendum two and a half years ago. The UK is due to leave the EU on March 29, with or without a deal.
The fashion sector, which relies heavily on imported materials and international talent, is particularly vulnerable to Brexit-related headwinds. Prominent members of the UK fashion establishment have vocally opposed the country’s separation from the EU. According to industry advocates Fashion Roundtable, 96 percent of the sector within the UK voted to remain.
In the aftermath of the vote, luxury British retailer Harrods said it is increasing the stock it's bringing in for the Spring/ Summer season to protect more exposed areas of its business ahead of the March Brexit deadline.
"The British luxury industry is profoundly impacted by the lack of clarity from the government on our future relationship with the EU," said Harrods managing director Michael Ward. "This continuing uncertainty ... is impacting the ability of businesses to plan for any form of Brexit outcome, a situation which becomes more dangerous as we approach March 29th and the prospect of a no-deal.
The uncertainty comes at a tough time for the UK’s retail sector. It’s already contending with higher prices because of the dampening impact of Brexit uncertainty on the value of the pound, as well as the broader challenges facing the global retail market.
We cannot emphasise strongly enough that a no-deal Brexit is a scenario that should be avoided at all costs.
The industry has suffered a mixed holiday season, with online competition continuing to challenge traditional retailers, but even hot internet-based companies have struggled in the UK. Asos issued a profit warning in December that sent its shares tumbling, and Boohoo Group fell around 9 percent Tuesday after its increase in full-year growth forecasts missed investor expectations.
The risks surrounding Brexit are only compounding these challenges.
“After two years of not knowing what the outcome might be, we still today are unsure of what might happen,” said Tamara Cincik, founder and chief executive of Fashion Roundtable. “Combine this with the issues to bricks and mortar retail and you have a perfect storm.”
For the industry, the main areas of concern are the impact leaving the European Union could have on trade, investment and access to skilled international workers. So far, the impact of Tuesday's vote on the British currency has been muted, with the pound broadly steady against the US dollar.
The worst scenario for the fashion industry would be that the UK crashes out of the European Union with no deal at all. That would likely mean sharply higher import costs and could potentially lead to labour shortages and goods stuck outside ports of entry on both sides of the border, as freedom of movement and trade guaranteed by EU membership could be abruptly suspended. Any further devaluation of the British pound — already down over 10 percent since the referendum — and additional economic uncertainty would also likely have a negative impact on consumer spending.
“We cannot emphasise strongly enough that a no-deal Brexit is a scenario that should be avoided at all costs,” said Caroline Rush, chief executive of the BFC after the results of the vote were announced. “The ongoing uncertainty and confusion that a no deal creates will have a negative impact on our industry, where investment is already impacted from the uncertainty being faced.”
Some brands have already begun to prepare for the worst, quietly renting EU warehouses and building stockpiles of summer styles in the UK earlier than usual — measures that would mitigate the impact of higher tariffs and potential port delays in the event of a “hard” Brexit.
British designer Katharine Hamnett, known for her politically-charged slogan T-shirts, has created a series of “Cancel Brexit” T-shirts and is already a vocal supporter of a second referendum. In the Brexit debate, “everything” is at stake for the sector, she said Tuesday.
That's still not necessarily how things will play out, but the scale of the Prime Minister's defeat Tuesday has created even greater uncertainty around the future of Brexit.
In the wake of the vote, the leader of the opposition Labour party, Jeremy Corbyn, has tabled a vote of no confidence in the government. The Prime Minister is expected to retain enough support in parliament to win the confidence vote, and has vowed to press on with efforts to secure an orderly Brexit.
Still, the lack of consensus around a possible deal opens the way for members of parliament to bring more wildcard scenarios into play. That could include a push for a very different Brexit deal, possibly more along the lines of the Norwegian model, allowing the UK to retain access to the EU's single market and freedom of movement.
While still an outlier, the industry seems to be coalescing around a push for a second chance to vote on Brexit. The "people's vote" is "the preferred current option to minimise the impact to the industry based on there being no valid deal on the table," Rush said.