On Friday 29 March 2019, the UK will leave the European Union (EU). The exact details of how this separation will take place – how over 40 years’ worth of treaties and agreements covering thousands of different subjects will be unpicked – are, frankly, anyone's guess. There are conflicting messages coming from the UK and EU negotiating teams on the progress of talks on this so-called ‘Brexit’.
What is clear, however, is that the outcomes of these negotiations will be of considerable significance to the European technical textiles industry, and will have global ramifications.
According to the European Apparel and Textile Confederation (Euratex), for example, the textiles and clothing industry employs 1.7 million people in the EU, and it generated a total turnover of €171 billion in 2016. The UK is the EU's third most important trade partner in textiles and clothing goods. On average, the UK textiles and clothing industry imported almost €10 billion of goods from the EU, while its exports amounted to €6.2 billion in the same period (2014–2016).
With the UK and EU textiles industries being so closely interlinked in terms of supply chains, investments and labour, the smooth exit of the UK from the EU is of vital importance to both parties.
Broadly speaking, there are two ways this could happen. A ‘soft’ Brexit could mean that the UK retains its access to the single market and has to accept the free movement of people as a result. While this might be preferable for the textiles industry – meaning more or less ‘business as usual’ – it may prove unpopular with a sizable proportion of the UK electorate that backed Brexit in the first place and be politically untenable as a result.
On the other hand, a ‘hard’ Brexit would see the UK refusing to compromise on issues such as the free movement of people even if meant leaving the single market. This option would cause much more upheaval for the European technical textiles industry.
The Pound is currently weak against the Euro, and is likely to remain so as these negotiations play out. This means that European companies will pay less for goods from the UK, which could lead to British companies increasing the volumes of their sales to the continent. However, as we have seen, the UK textiles industry is a net importer and will have to pay significantly more for the raw materials it needs. Given that the majority of technical textiles producers in the UK are small-to-medium enterprises (SMEs), their willingness and ability to swallow these extra costs is likely limited.
Significant restrictions on the free movement of labour between the UK and Europe would be a blow the industry, which relies on being able to attract both motivated labour and the best and brightest minds, regardless of their nationality.
Further still, Brexit could have mean the UK leaving the European Union Customs Union (EUCU). Not only could this lead to an increase in tariffs, it could mean that shipments take longer to reach their destinations as customs inspections are intensified—a particularly serious problem for supply chains operating on a ‘just-in-time’ basis, such as those in the automotive industry.
Trade agreements between the UK and the EU could iron-out many of these issues, but these may take many years to formalize and discussions cannot even begin before Brexit occurs. As such, those involved in the technical textiles industry on both sides of the Channel must build contingencies for the worst-case scenarios, and hope for the best.