With Britain on the verge of a referendum to decide whether to stay in or withdraw from the European Union, experts have speculated on what impact a Brexit could have on our economy.
Some have said fuel and flights will get more expensive, hurting Britons’ holidays. But there could be another unintended consequence if the British vote to leave the EU: clothes.
Sterling hit its lowest against the dollar since 2009 last week and HSBC has warned a Brexit could wipe a further 20 per cent off sterling’s value.
Analysts said that what happens to sterling could have considerable implications for import and consumer prices.
“The cost of a weaker pound impacts all retailers, so it will be passed on to consumers,” Brun Monteyne, senior analyst at Sanford Beinstein, told the Financial Times.
A weaker pound means retailers have to spend more to buy the same amount of clothes, making those clothes more expensive for buyers in the shops.
British clothing and home furnishing retailers source about three-quarters of their goods from suppliers in China and south Asia, according to UBS analysts.
Most retailers will have hedged their currency exposure for the next six to nine months, but senior retailers such as Lord Rose, M&S former executive chairman, warned prices will be affected.
“We know if we came out overnight there would be new tariffs. In the interim does that mean jobs and prices are affected? We believe it will,” he told Retail Week.
This would be a significant change for UK buyers. Low inflation has been a boon to consumers who experienced greater grains as there’s been little to no price hike for six years.
Retailers still have the option to negotiate better suppliers and have lower input costs, Andrea Felsted argued on Bloomberg. But it might not be enough.
“So renegotiation, relocation and repatriation just won't be enough: the hit from the pound's slump against the dollar has been so extreme, and Asia accounts for such a big part of British retailers' sourcing,” Felsted wrote.
What's the European Parliament ever done for us?
What's the European Parliament ever done for us?
1/5 A cap on the amount of hours an employer can make you work
The Working Time directive provides legal standards to ensure the health and safety of employees in Europe. Among the many rules are a working week of a maximum 48 hours, including overtime, a daily rest period of 11 hours in every 24, a break if a person works for six hours or more, and one day off in every seven. It also includes provisions for paid annual leave of at least four weeks every year
2/5 Helping the people of Britain to avoid smoking
In 2014 MEPs passed the Tobacco Products Directive strengthening existing rules on the manufacture, production and presentation of tobacco products. This includes things like reduced branding, restrictions on products containing flavoured tobacco, health warnings on cigarette packets and provisions for e-cigarettes to ensure they are safe
3/5 Helping you to make the right choices with your food
Thanks to the European Parliament, UK consumers have access to more information than ever about their food and drink. This includes amount of fat, and how much of it is saturated, carbohydrates, sugars, protein and so on. It also includes portion sizes and guideline daily amount information so people can make informed choices about their diet. All facts must be clear and easy to understand
4/5 Two year guarantees and 14-day returns policy for all products
Consumers across the EU have access to a number of rights, from things which are potentially very useful, to things which used to be annoying. For example, shoppers in the UK receive a two-year guarantee on all products, and a 14-day period to change their minds and return a purchase, these things are useful
www.PeopleImages.com-licence restrictions apply
5/5 Keeping your air nice and fresh (and safe)
Believe it or not, although the situation is improving, some areas of the UK have appalling air quality. A report by the Royal College of Physicians released on 23 February says 40,000 deaths are caused by outdoor air pollution in the UK every year. Air pollution is linked to a number of illnesses and conditions, from Asthma to diabetes and dementia. The report estimates the costs to British business and the health service add up to £20 billion every year
A referendum to stay or withdraw from the European Union will be held on June 23.
“A vote to leave the EU would be the start, not the end, of a process. It would begin a period of uncertainty, of unknown length, and an unpredictable outcome, ” a government report has warned on Monday.
Some companies prefer to be seen as “neutral” and said it is a matter for British people.
“The referendum on EU membership is a decision for the people of Britain. Whatever that decision is, our focus will continue to be on serving customers,” Tesco said in a statement.