Ahead of the UK-EU Summit in London, Walpole, the trade association for the British luxury market, has disclosed how Brexit would affect British luxury exports.
Luxury exports to the EU are 43 per cent less than they would have been in the absence of Brexit, per recent research conducted by Frontier Economics on behalf of Walpole.
In the first thorough examination of Brexit’s effects on the luxury market, Walpole, a non-profit group that represents over 250 of the best British brands, such as Jo Malone London, Burberry, Harrods, and Alexander McQueen, is urging the government to remove EU trade restrictions.
Fashion and accessories (-64 per cent) and interior design, house, and workmanship (-50 per cent) have been most affected. Exports to non-EU markets have almost reached their pre-pandemic levels in the meantime.
Businesses have had to deal with a difficult global trade environment since Brexit, with rising US tariffs and declining Chinese consumer demand adding to the complexity of UK-EU relations.
Walpole claims that even though the EU’s share of global luxury exports fell from 42 per cent in 2017 to 32 per cent in 2022, it still ranks as the UK’s top export destination, surpassing the US and Asia (both at 22 per cent) and the Gulf (14 per cent).
Since the UK left the EU, trade barriers have included increased costs and complicated documentation requirements. Brands with high consumer expectations have been disproportionately affected by export delays caused by increased certification requirements and customs complications.
Refunds and VAT reclamation present further difficulties for businesses, causing some to bear the losses on returned products. Additionally, shifting sustainability standards and labelling regulations have caused operational uncertainty for certain organisations.
To address these problems, a number of luxury firms in the UK have set up fulfilment facilities and business entities in the EU, taking money away from the UK that could have been used to boost its economy.
Over 450,000 jobs are supported by the US $ 108 billion British luxury market, which also accounts for 3.7 per cent of the country’s GDP.
