Brexit could make clothing more expensive

It is true that the fashion industry reflects currently situations occurring in the world. As the impending referendum sees Britain divided between the pros and cons of staying and exiting the European Union, the ‘see now, buy now’ direct to consumers business model sees fashion houses and organisations across the globe divided on the current functionality of the fashion system. However, both situations stand to affect the economy, with a potential Brexit likely to hit both the fashion industry and UK consumers pockets.

Experts believe that if British vote to leave the EU that it could lead to a spike in clothing prices. Sterling already reached its lowest point against the dollar since 2009 last week and now HSBC is warning that a Brexit could take off an additional 20 per cent of the sterling’s value. The dropping value of the sterling is likely to have heavy implications for consumer prices and imports in Britain. “The cost of a weaker pound impacts all retailers, so it will be passed on to consumers,” said Brun Monteyne, senior analyst at Sanford Beinstein, to the Financial Times.

If the pound continues to weaken against the dollar, this would mean that fashion retailers would have to spend more money in order to purchase the same amount of clothes, which in turn would make clothing more expensive for consumers. Most British apparel retailers source up to 75 percent of their products from suppliers in Asia, according to UBS analysts. Although most retailers will have taken into account currency fluctuations for the next two to three quarters, Lord Rose, M&S dormer executive chairman believes prices will still be hit. “We know if we came out overnight there would be new tariffs. In the interim does that mean jobs and prices are affected? We believe it will,” he told Retail Week.

Former Labour Cabinet Minister, Lord Mandelson, also warns that a exit from the EU will impact trade and force shop prices up. He stresses that if Britain was to leave the EU it would mean no more "unhindered or unfettered" access to Europe's single market, whilst Britain would still have to accept EU standards to have access. "It would mean once the divorce is promulgated... facing a return to paying EU tariffs, while whatever deal is finally negotiated and struck between us - EU tariffs for our exports and imports and that means higher prices in our shops."