Britain’s vote to leave the European Union will affect more than immigration and travel — it’s also expected to do a number on the UK economy. And since fashion is a major part of said economy — Business of Fashion estimates that the industry brought in £26 billion ($38 billion) for Britain in 2014 — many designers have been very outspoken about the outcome of the so-called ‘Brexit’ vote.
In May, more than 280 Brits in the fashion and creative industries signed a letter expressing their desire to remain in the EU — and several of those people were quick to come forward with their disdain of the result. “It’s a tragedy, we want to make the world a better place, we must cooperate, Britain cannot go it alone,” tweeted Vivienne Westwood after the votes had been counted. And Alexa Chung got personal, writing, “Scooping flesh out. Setting some aside in a jar marked ‘immigrant’. Unclear where to scatter myself.”
So, in terms of business, what exactly are they worried about? I consulted Yahoo Finance Managing Editor Sam Ro for an explainer.
According to Ro, there are several reasons why so many British businesses are pro-remain. Firstly (and this isn’t so much about money as it is to save face), brands are hesitant to associate themselves with the somewhat Trump-like ideology that comes along with splitting up the EU. “A lot of it is about Britons blaming claiming that immigrants are taking their jobs,” says Ro. “Voting to leave comes with xenophobic connotations. To put it bluntly, your customer base may associate you and your brand with racists.”
In terms of actual cash being brought in, Ro says that the fast-falling GBP (its value is now the lowest it’s been since 1985) could initially be a boon for British businesses that frequently export goods overseas and are popular with tourists. A weak local currency makes exported goods cheaper to foreign buyers. A weak local currency also makes a country a more affordable vacation destination for tourists, who’ll now be able to snatch up more merch.
Explains Ro, “The CEO of a UK luxury brand that sells much of its wares to China or the US may think that leaving the EU is good for business, even though it may be bad for the economy as a whole.”
That’s because the uncertainty that comes along with Britain’s new non-EU stance will almost certainly kill economic growth. The sudden resignation of Prime Minister David Cameron, plus the looming possibility of job losses and another recession all add up to a chaotic situation. “With all that uncertainty hanging over them, most consumers would rather save their money than spend it on things like fashion and luxury items,” Ro says.
As it is, the weakened pound has already begun to greatly affect the worth of several high profile brands. Business of Fashion reports that the stock values of companies like Jimmy Choo, Burberry, and Mulberry have decreased by about £122 billion.
Kering, the French luxury goods holding company that owns Brit brands Alexander McQueen, Stella McCartney, and Christopher Kane, released a statement Friday that said, “As a global business evolving in a global market, Kering has a long and successful history of adapting to change. While it is too early to further comment on the implications of this referendum on the luxury business, Kering is confident in its ability to adapt to this new environment. (We) will continue to welcome initiatives to bolster collaboration, be it with regards to trade, talent or the exchange of ideas.”
But seemingly self-assured as Kering may be, others realize that the fashion and luxury industries won’t necessarily be able to stay afloat in Britain’s uncertain new economic state without some element of partnerships. Said Caroline Rush, chief executive of the British Fashion Council, “We now have a role to play in keeping the government updated on our industry’s priorities and keeping the designer community updated on any likely impact to business as our country prepares to leave the EU over the coming years.”