Brexit negotiations carry huge ramifications for UK luxury sector
11/06/2019
The UK luxury sector is highly dependent on exports, with around 80% of production destined for overseas markets in 2017. In value terms, this represented sales of £38.5 billon. The most important export markets were the European Union, North America and China.
The report also contained estimates of the number of direct and indirect jobs that result from this sector. In 2017, this figure stood at 156,000 employees, compared to 113,000 four years earlier.
Walpole has also forecast that UK luxury sector sales will be worth between £51.1 billion and £57 billion in 2019, although it pointed out that “this is highly contingent on the outcome of negotiations with the EU”.
The ramifications of the UK’s departure from the EU would also affect the outlook in the longer-term, according to the report, which provided one projection for an “optimistic scenario” and another for a “pessimistic scenario”.
In the former, the UK and the EU would conclude a “a deep free-trade agreement that ensures duty-free trade, substantial regulatory convergence, access to skilled workers, and in which international trade tensions subside.” In this scenario, by 2024, the value of sales from the UK luxury sector would be between £65 billion and £74 billion.
Should the UK and the EU be unable to reach an agreement, the report estimates that sales in 2024 would be between £52 billion and £60 billion. Walpole said the lower end of this range “represents a very low level of growth compared to current levels”.
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