Dhaka, Monday, 20 May 2019

UK fears retail price rise with brexit


Apparel Desk: Uncertainty about the UK’s trading relationships with the European Union and the rest of the world continues. Price rises are likely in the event of a no-deal Brexit. If no deal is struck with the EU, UK companies will be forced into World Trade Organization (WTO) terms, which will put upward cost pressures on retailers, brands and suppliers. The impact of a no-deal Brexit would be significant. Tariffs alone represent about four per cent of sales for an average women’s wear retailer. Most retailers may increase pricing to mitigate this. The UK is due to leave the EU on March 29, 2019.

If tariffs increase overall costs by more than three per cent, then retailers can be expected to pay half and suppliers pay half. However, if it is a sustained increase in costs, then it will have to ripple through into retail prices. Retailers and suppliers will have to absorb the costs in the short term, but in the long term, consumers will be affected. In a no-deal scenario, the combination of increased tariffs, the burden of non-tariff barriers, and likely depreciation of the pound means retailers will face upward cost pressures.