HomeBussinessUK clothing sales to EU plummet as Brexit red tape deters exporters

UK clothing sales to EU plummet as Brexit red tape deters exporters

Date:

Related stories

spot_imgspot_img

UK exports of clothing and footwear to the EU have dived since Brexit, according to a new study that shows the extent to which complex regulations and red tape at the border have deterred firms from sending goods across the Channel.

Exports of clothing and footwear sold to EU countries have fallen from £7.4bn in 2019 to £2.7bn in 2023, helping fuel an 18% slump in sales of all non-food goods exports to countries covered by the EU single market, according to the consultancy Retail Economics and online marketplace Tradebyte.

The report said the decline meant British brands and retailers have seen sales to the EU plummet since Brexit, despite a flourishing European e-commerce market.

The only sectors to increase export sales over the same period were health and beauty, and DIY and gardening, offsetting some of the fall from clothing and footwear.

Many of the worst affected were small and medium-sized businesses, which faced a larger relative burden from red tape than multinational firms.

One of the report’s authors, Richard Lim, head of Retail Economics, said some of the fall was simply down to a change in trade routes. UK firms that previously repackaged imports of goods made in Asia for sale in the EU have now reorganised their supply chains, by setting up offices inside the single market to bypass border regulations.

However, red tape has forced many producers making apparel in the UK to move manufacturing to an EU country, at a cost to UK skills and jobs.

In one instance a sock-maker based in Leicester, which declined to be named, has shifted production to Italy, ending more than 100 years of manufacturing in the east Midlands, Lim said.

The UK has also failed to benefit from a boom in online goods sales in the EU since 2019, the authors suggest.

“Online retail is estimated to add £323bn of annual sales to EU economies, but additional trade frictions caused by Brexit-related complexities are curtailing this international sales opportunity for UK-based brands and retailers,” the reportstated.

Lim said: “It is a huge opportunity for UK brands that is not being grabbed.”

He said the fall in the value of trade with the EU was softened by last year’s spike in inflation, which increased the cost of goods for export.

A separate report on Tuesday by the thinktank UK in a Changing Europe found that while exports of goods had declined, services exports had increased by nearly 30% compared with February 2020.

It said analysis of recent official figures showed that the UK’s services trade “has not only bounced back swiftly after the pandemic, but also exceeded pre-pandemic levels by the latter half of 2022”.

skip past newsletter promotion

It added: “This growth has been driven by ‘a boom’ in the UK’s trade in business services. This sector, which includes legal services and consultancies, has now overtaken manufacturing and transport equipment (including cars) to be the UK’s largest export sector.”

Rain Newton-Smith, CEO of the CBI.

The UK’s exports of services had remained resilient over the period 2020 to 2023 while services exports by France and Germany had declined.

Why UK services firms had increased sales when they were largely unaffected by Brexit rule changes, was unclear, the report said.

Rain Newton-Smith, head of the CBI, said there was a case to review the UK’s trading relationship as she set out the business lobby group’s wishlist ahead of the 4 July general election.

Newton-Smith called for a “bold pitch” to international investors and said Britain and the EU should use a review of their trade deal in 2026.

“That will be a moment for us to think about how do we improve and how do we minimise some of those trading frictions that are having an impact on business,” she told Bloomberg.

Labour leader Keir Starmer has said he will align with the EU on food and agricultural products if he becomes prime minister. But he has ruled out rejoining the single market or allowing freedom of movement between Britain and the EU.

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

spot_img