Brexit a lose-lose situation for textile industry says Euratex
On January 1, full customs checks were introduced between the United Kingdom and the European Union. A hindrance that will worsen an already deteriorating situation for the textile and apparel sectors, according to Euratex, the European Apparel and Textile Confederation. Euratex indicated that, in the first nine months of 2021, EU imports from the UK dropped by 44%, while EU exports to the UK fell by 22%.
In these three quarters alone, the EU's estimated revenue shortfall is respectively €2 billion and €1.6 billion. Italy, the Netherlands, Belgium, and Germany are said to be the countries whose textile exports have been most affected by Brexit. On the import side, Germany, Ireland and France are reportedly the countries suffering from the largest shortfalls. Analysed on a product-by-product basis, clothes have been the hardest hit category, both in import and in export terms, with trade losses amounting to €3.4 billion.
These figures must be compared with those collected by the UK Fashion and Textile Association. Last May, the association revealed the results of a survey of 138 companies operating in the sector, including retailers, manufacturers, distribution agencies and wholesalers. The survey showed that 71% of these companies were dependent on imports from the EU. In addition to a cyclical increase in freight costs (affecting 92% of them), these companies were hit by increased costs for customs operations (in 83% of cases), by order cancellations caused by the terms of the UK-EU deal (53% of cases), and 41% of companies were hit by double custom duties.
“The vast majority of [British] companies surveyed stated they want to pass on such cost increases to consumers in the course of the next six to 12 months,” reported Euratex. A situation that echoes that of the apparel industry in the EU, where consumer price increases are on the horizon in response to sourcing issues and rising costs. In France, a survey by the French Fashion Institute (IFM) showed that half of the country’s fashion brands intend to increase their prices this year.
According to Euratex, the situation is all the more critical because the UK is the EU's premier client for textile and apparel products. “Euratex is calling on the EU and the UK to cooperate effectively in order to address, resolve and remove the problems linked with the EU-UK trade deal, which is currently preventing smooth trade flows across the English Channel. This is causing considerable losses for textile companies in both the EU and the UK,” said Euratex, which fears that the new measures introduced on January 1 will further aggravate the situation.
In the first half of 2021, the UK imported €1.89 billion worth of EU apparel, and €1.28 billion worth of EU textiles.
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