Brexit aftershock: Euromonitor downgrades UK growth for 2020

Euromonitor has revised its 2020 UK GDP growth forecast by -0.1 percentage points to 1.1 percent in its Global Economic Forecast of Q1 2020.

Even though the UK is technically out of the EU and its governing institutions, the Brexit saga and uncertainty will continue throughout 2020 as the UK and the EU must negotiate a future Free Trade Agreement (FTA) in the transitory period running until the end of 2020. For the fashion industry this means possible export tariffs for its biggest trading partner from 2021 onward. Furthermore, the UK imports over 14,000,000 pounds of clothing and accessories per day.

Prime Minister Johnson passed a bill to prohibit the UK government from asking for an extension to the transitory period, setting the country on a binary path: signing an FTA by the end of the year or crashing out of the EU single market without a deal and abiding by the World Trade Organisation’s rules.

Many consider the timeframe unrealistic. “The absolute number one priority has to be tariffs,” Adam Mansell, CEO of the UK Fashion and Textile Association, told Vogue Business.

“We hope the UK Government and the European Commission will adopt a pragmatic approach on the future regulatory relationship, in particular on customs processes,” William Bain, trade policy advisor at the British Retail Consortium told Vogue Business. “This could also include sector-specific implementation periods to allow businesses to apply as-yet-unknown changes affecting IT, staffing, taxation and compliance systems.”

Source: Euromonitor Global Economic Forecasts: Q1 2020