It’s a Brexit side effect not many have talked about, but the days of cheap fashion as we know it could be numbered and that easy pre-payday splurge on the high street may become something you think about more carefully. The pound has lost a fifth of its value against major currencies, specifically the euro and the dollar, since the referendum on June 23rd. In practical fashion terms, this means a dress that cost a retailer £50 to buy from a supplier overseas might now cost £60.
Many things affect the mark-up stores add – rent and wages, for example – and retailers can often find ways of fixing the price of the factory orders they place in advance. But chains such as Zara or H&M usually make a profit of about 15% on anything they sell; a 15% that could be wiped out by a hike in costs. That’s not something the shareholders of any company would just grin and bear. And so the higher prices would eventually be passed on to us.
And it’s not just clothes, either: the Bank of England has admitted that the weaker exchange rate will push up the cost of living more generally.
Theresa May has stated she’d like to trigger Article 50, the process by which we’ll untangle ourselves from the EU, next spring. Lawyers, politicians and civil servants will then have two years to negotiate deals on hundreds of issues – from farming to financial services and way beyond.
If they can’t work out a deal by 2019 – which is very possible – then what’s left on the shelf is hardly a bargain. We lose our free trade deal with the EU, and have to follow the rules of the World Trade Organisation (WTO). These set charges or tariffs on goods shipped in – the idea is to stop cheaper imports flooding in and squeezing our manufacturers out of business. That could slap as much as 16% extra on each bit of clothing or pair of shoes from the EU. So importing that dress I mentioned earlier could now cost retailers £70. Ouch.
But it’s not just about price – tearing up trade deals may mean that dress is subject to lengthy customs checks and form-filling to allow it to enter the country. The journey from catwalk to high street could become more snail pace than fast fashion.
So what? Our wardrobes are more likely to boast ‘made in China’ than ‘made in Milan’ (if not, please feel free to send your cast-offs my way) anyway. But this means we’ll also forego trade deals the EU has with other countries until we agree our own. Again, the rules of the WTO would apply. That, according to shopkeepers’ association, the British Retail Consortium, could slap a tariff of 12% on t-shirts made in Bangladesh.
And if the fate of retail therapy is tempting you to drown your sorrows, or forsake food for fashion, think again. Similar charges may mean a £6 bottle of Merlot costs £7, and could bump up the price of a steak by a quarter. That’s the worst-case scenario. Let’s hope our Prime Minister, who refreshingly batted away the fascination with her shoes as an “excuse to buy more”, prioritises sorting out a deal for the high street.
But if that doesn’t work, how do you Brexit-proof your bank balance? Buying British perhaps, which would boost home-grown businesses. But Marmite-gate showed that a product isn’t just what it says on the tin – or rather, jar. The yeast extract (the leftovers from brewing beer) that makes up the brown sticky stuff is sourced in the UK. It was the rising cost of importing that iconic glass jar, its producer Unilever claims, that lay behind its bid to hike prices. Equally, the cost of imported fabric or trimmings – most zips, for example, are made by Japan’s YKK – could bump up the price of clothes made here.
If so, it might be time to embrace vintage - or invest in a sewing machine.