Walpole has actively raised the sector’s concerns on Brexit to government over the past two years, but has not previously made a public statement on the impact of Brexit on luxury. We now consider the risks of a no-deal Brexit to be too great to keep silent, and have added our voice to other British businesses to urge the government to unite around a pro-business Brexit.
Please find below the letter to CEO’s in full:
Over the last two years, you have voiced your Brexit concerns to me individually, at Walpole’s Brexit roundtables and via our ongoing surveys. Whilst the global luxury sector has been growing at a rate of 5% a year, many of you have seen the steady impact of reduced access to talent and workforce and some of you have delayed investment or expansion plans due to the uncertainty over what will happen after March 29th 2019.
In June 2016, we took the decision to voice our concerns to the government directly and not via a public forum. After more than two years with no clarity on Brexit, the time has come to push harder. It is time to make our views clearly heard as the prospect of a hard, or even a No-Deal, Brexit becomes more than a possibility.
In recent weeks Airbus, BMW and Siemens, amongst others, have sounded the alarm over the consequences of a no-deal scenario. Walpole believes the time has come to add our voices to those from UK businesses frustrated by lack of progress in Brexit negotiations. It is time for us all to speak frankly about the undisputable risks to business and the economy.
You will have read in the newspapers of the meeting of the wider cabinet at Chequers this Friday. This presents an opportunity to urge ministers to put pragmatism and common sense ahead of ideology, to acknowledge that crashing out of the EU on WTO rules – a no-deal Brexit - would present the worst possible scenario for business and the country’s prosperity, and to ask the government, once famous for being the party of business, to deliver a pro-business Brexit.
I want to ask you to go on the record, to stand up and be counted, and help Walpole harness the collective voice of Britain’s best loved companies who wish to continue to make this country a success around the world.
Ours are powerful voices. Ours are businesses that not only contribute £32.2 billion to the economy, and create long-term sustainable employment, but also drive innovation and export around the world. We want to keep our businesses in Britain, even though, with complex European supply chains and just-in-time manufacturing and delivery, it may make less economic sense for us to do so.
Walpole also appreciates that negotiation is not a one way street. We realise that the EU has a responsibility to protect the interests of European businesses in Britain, which is the fifth biggest market in the world for luxury goods. Walpole understands that both sides have much to lose. To this end we will be making representation to our contacts in Brussels and to our fellow luxury associations in France, Germany, Italy and Spain, to gather their support.
Walpole's official statement:
“Walpole’s role is to promote, protect and develop British luxury worldwide. The British luxury goods sector contributes £32.2 billion to the economy, employs over 110,000 people and generates over £5billion in financial contributions to the Exchequer. We export £25bn a year, commit to manufacturing in the UK, drive innovation and are the standard bearers for British excellence. We are proud of the prestige we bring to Brand Britain.
As the voice of British luxury, Walpole urges the government to unite around a pro-business Brexit and provide three key conditions to ensure Britain’s world famous brands continue to flourish: Frictionless access to markets via a customs union; regulatory alignment; and the safeguarding of access to creative talent and skilled workforce.”
Signatories
Asceno; Backes & Strauss; Belmond; Cadogan; CTO Lighting; DAKS; DCM; Duke + Dexter; Dunhill; Ettinger; FDR London/The Jackal; Hamptons Wealth Partnership; Harrods; The Highland Chocolatier; LONB; Northacre; Ormonde Jayne; Peter Reed; Rapport London; Rococo Chocolates; Stephen Einhorn; Struthers London; Sunseeker International; Traveller Made; Troubadour Goods; Trunk Clothiers
Walpole member's statements and commentary:
Marc Demarquette, Demarquette: “With perishability at stake this would cripple our suppliers and our delivery, with penalties to be paid due to the late delivery of good, coupled with the inability to schedule our workload. In short - this would be a quick fatal outcome”.
Thomas Smit, Elegantes: “What is harming business is the indecision, politicking and prevarication. The Government needs to be decisive and act in the interests of the country, not itself. Business needs to make a rational, intelligent assessment of what is best, and take the emotion out of its analysis. Too much of the comment is based on whether people voted Remain or Leave – we need to respect the referendum and get on with exiting the EU in the most advantageous way. Business leaders should unite, lead their enterprises in a constructive manner and unite their employees because Great Britain PLC has a powerful balance sheet. Its workforce are hardworking and passionate. We have creative talent, pioneers in the automotive, scientific and medical fields and there is no room for bickering about the fact that we are leaving the EU. Politicians on both sides must act for the people who elected them, based on facts and not emotions. We should not be afraid of Brexit. GBP will drop about 12-14%, employment will increase, as will be exports. We'll learn to stand on our own feet, acquire new skills, be self-reliant and show leadership. The Brits are the most tactful and skilful negotiators (non-politicians of course). We are revered and respected worldwide. We are resourceful and resilient. Just get us out of the FIFA-style EU and back to the grinding wheel and together we will prosper! United we stand, divided we fall”.
Robert Ettinger, Ettinger: “I have spent the past few days in our Birmingham factory discussing how we would handle a no deal Brexit and the prospect of no free trade agreement with the EEC. Ettinger as a company buy our raw materials in the UK where we can, but sadly many of our suppliers have closed and we are therefore having to buy mostly in Europe. Once our products are made many of them are sold to companies in the EEC. A no free trade agreement would mean two lots of duties to be paid and delays in importing and exporting... a nightmare scenario. Although we are growing our factory in the UK, this uncertainty is not only slowing that down but also making us and many other businesses consider how to get around this possible scenario should it happen... we can see that many companies would slow down their UK manufacturing and consider opening in Europe to get over import and export duties. I fully agree that long-term common sense and pragmatism must prevail to ensure the continuing prosperity of this country”.
Andrew Phillips, Hamptons Wealth Partnership: “The housing industry sits in a very precarious position and with the pressure of unpalatable taxation and Brexit hanging over the market, the whole commercial chain that supports the building industry could or will collapse further into recession if we don’t act now. The consumer and the businesses who prosper from the housing market are calling out for sustainable clarity and the present ambiguity needs to be turned into a progressive resolution”.
Iain Burnett, The Highland Chocolatier: “Our customers, staff and critical supplies come from both local and other EU countries. Much additional and unnecessary cost has already been absorbed due to the Brexit processes. The greater the additional economic and geographic barriers, the more seriously damaging will be the effects”.
Reinhard Mieck, LONB: “Being a start-up luxury business, we require a straight-forward set-up of our operations. A no deal Brexit will require us to relocate our global e-commerce business from the UK to an EU country in order to avoid our business becoming uncompetitive due to price increases caused by custom duties. All our goods are produced in Italy”. Katie Goldblatt, Rapport London: “The idea of being able to walk away empty-handed might be a negotiating tactic by the Government, but it would in reality deliver a risky and expensive blow to our business. We could face increased tariffs and the risk of other obstacles to trade through customs procedures and higher compliance costs. In addition to this we source many of our materials from Europe and therefore we face a real risk of not being able to deliver on time to our clients which could destroy our business. Moreover, Europe is not an insignificant export market and thus we are worried about the prospect of new barriers to trade, either from tariffs or the costs of any moves by Britain to set its own industry standards and rules.
Stephen Einhorn, Stephen Einhorn: “What the Government are not concerned with is making sure that decisions are made for the UK’s benefit in the short and long term. It is absolute insanity and an outrage for our elected politicians to be leading our country into such a disastrous, isolationist and precarious position, that will impact us for decades. We have directly been feeling the negative heat from Brexit as have most high street retailers. There is a distinct lack of consumer confidence, because of the uncertainty and market instability. Many high earning employees have left along with the various companies and institutions that have relocated. We have been forced to reduce our staff by 15% in order to cope with the instability. We need certainty. "Frictionless access to markets via a customs union; regulatory alignment; and the safeguarding of access to creative talent and skilled workforce.” is the absolute minimum requirement for any kind of economic and social stability for our talented, creative and inclusive country".
Anonymous: “Any delays or impediments to moving goods between mainland Europe and the UK would be catastrophic for our business relying, as we do, on the bulk of our goods coming from the EU, and the fact that we hve outlets and customers across the Channel that we need to competitively supply. Also, any further increase in cost resulting from a no deal scenario, on top of the already increased costs off the back of the weakness of sterling post the referendum, would likely make our business model untenable”.
Anonymous:
“Our plans already anticipate that Brexit will lead to a hit to the British economy. Barriers to trade and the free movement of people will inevitably lead to a reduction in household income which will, in turn, reduce demand for the majority of products. If there is a hard Brexit or a no-deal Brexit, the impact will be exacerbated. We are therefore taking a more cautious view on the UK. Assuming that others feel the same way, this is likely to lead to a reduction in confidence and a knock-on impact on investment, which will in turn further limit growth in the overall economy. We import raw materials and export finished products. A no-deal Brexit would likely result in tariffs, leading to higher costs and more red tape. We are already experiencing challenges with recruitment and fear a further tightening of the labour market. As a proudly British company, we are concerned about the impact of Brexit on the British brand. Overseas buyers view what is going on at the moment with a mixture of bemusement and sadness, but underneath that, there is a sense that Britain is looking backwards rather than forwards. It is now obvious that Brexit is bad for British companies and will lead to lower profits for shareholders and lower real wages for employees. But business people fear speaking out openly because of the hostile political environment. There appear to be people who are not interested in debating facts or analysis, but would rather attack the motives of those who raise concerns”.Anonymous:
“There is no doubt that uncertainty around Brexit is damaging our business at the moment and we are also very worried that a hard Brexit could well damage our supply of the finest oak which comes from France”.
