CEO Letter | Brexit: The Draft Withdrawal Agreement and British Luxury

Earlier this week I emailed Walpole members to take the temperature of the British luxury sector with regard to the three Brexit scenarios that have been so much discussed over the last week.

It’s clear from the responses that the overwhelming majority still feel that UK businesses would be better off if retaining full EU membership were on the table as an option.

It’s also clear from the responses that a No Deal Brexit would be disastrous for the sector and for the prosperity of UK luxury businesses.

We now have clarity on what’s on offer from the draft withdrawal agreement negotiated by the UK and EU earlier this week. If the choice is between no deal and the deal on the table, the risk to luxury businesses is less with the proposed deal than with no deal at all.

Many of you will feel it’s a case of Hobson’s Choice. No one can pretend it is not a compromised deal. However, as Theresa May has said, if she is to deliver on the mandate of the Brexit vote, this is the best deal it has been possible to broker.

It remains to be seen what is happening with the Cabinet and in Parliament, but Walpole believes we, like many other business sectors in the UK, should support the draft withdrawal agreement. The alternative – no deal – is infinitely worse.

The reasons we feel this way are as follows:

Since we began to canvas the views of the luxury sector on Brexit impact through conversations, studies and surveys in June 2016, the main concerns have been clear, which are:

•    Access to talent and workforce – skilled and unskilled
•    Frictionless trade with the EU so goods and services can move freely
•    Regulatory alignment
•    The need for certainty and clarity to be able to make informed business decisions

The deal on the table gives us clarity on the transition period lasting until December 2020 by which time the ambition is to agree the future trade deal. Under the transition period we will remain in the customs union until December 2020 so trade can continue under the current terms. We will have regulatory alignment until 2020 – IP and Selective Distribution will continue, and potentially costly issues around labelling are no longer imminent. The rights of EU citizens in the UK are confirmed for those already here and for those that come in the transition period, ensuring access to talent. Beyond 2020, it remains to be seen, but at least this gives us clarity for the immediate future. Most importantly, this avoids the no deal scenario and all that that entails.

This whole process has been typified by rancorous infighting in the UK parliament on all sides – I know I speak for you all when I say this has been spectacularly unhelpful when facing the challenges presented by delivering on the Brexit vote.

However, having evaluated the known knowns, Walpole’s view is that, if the alternative is no deal, British luxury should back the draft withdrawal bill to limit the damage to our businesses.

Please find here a summary of the Draft Withdrawal Agreement – we have done our best to offer as much clarity on what it proposes as we can.