Our Trading with Europe report reveals Brexit's impact on British luxury exports to EU

The new edition of our Trading with Europe report for 2025 reveals the significant impact of Brexit on the £81 billion UK luxury sector. This research shows that luxury exports to the EU were on average 43% lower than they may have been without Brexit. This points to a substantial 'Brexit effect' on this industry which supports over 450,000 jobs and contributes £14.6bn to the Exchequer.

The research, conducted by Frontier Economics for Walpole, is the first comprehensive analysis of Brexit's impact on the luxury sector. The effect has been particularly pronounced in fashion and accessories (-64%) and interior design, home and craftsmanship (-50%). Meanwhile, exports to markets outside the EU have nearly returned to pre-pandemic levels.

"The British luxury sector has incredible growth potential, with a projection to reach £125 billion by 2028*," commented Helen Brocklebank, CEO of Walpole. "However, to achieve this ambition, we cannot afford to have one arm tied behind our back. Strong links and favourable trading with Europe remain essential to reaching this forecast, alongside our success in other global markets, and key to supporting craft-led and high value manufacturing in the UK."

Since Brexit, businesses have faced a challenging global trade landscape, with complexities in UK-EU relations compounded by rising US tariffs and reduced consumer demand in China. While the proportion of EU exports as a share of overall luxury exports has declined from 42% in 2017 to 32% in 2022, the EU remains the UK luxury sector's largest export market, ahead of both the US and Asia (both at 22%) and the Gulf (14%).

Since the UK's departure from the EU, the luxury sector has faced significant challenges, including increased trade barriers, complex paperwork requirements, and greater costs. 

Businesses have encountered delays in exports, driven by new certification requirements and customs complexities, disproportionately impacting brands with high customer expectations. The varying application of rules between EU member states and even between ports of entry has created unpredictable timescales and costs through inconsistent enforcement. Businesses also face challenges with refunds and VAT reclamation, forcing some to absorb losses on returned goods, while difficulties in sending product samples to journalists and influencers have hampered marketing efforts. Other businesses have experienced operational uncertainties due to changing sustainability standards and labelling requirements. 

Several British luxury brands have established fulfilment centres and commercial entities within the EU to mitigate these issues, diverting investment that could otherwise have supported UK growth.

Walpole has called on the UK government to take several actions to address these challenges:

• Join the Pan-Euro-Mediterranean Convention on Rules of Origin to support automotive and textile exports.

• Introduce a new digital labelling scheme to reduce complexity.

• Negotiate improved VAT cooperation with the EU.

• Secure a UK-EU Sanitary and Phytosanitary (SPS) agreement.

• Bring together freight and courier companies to deliver a consistent approach to trade rules.

• Launch a consumer confidence campaign in the EU to reassure customers it is easy to buy from the UK.

• Agree a Youth Mobility Scheme with the EU.

• Undertake a wide-ranging review of UK competitiveness.

If adopted together, these recommendations would provide a significant boost to British luxury brands' export potential in a complex and challenging global trade landscape, and would bolster the UK's prospects for growth.

About Frontier Economics

Frontier Economics is one of Europe’s largest economic consultancies, with offices in London, Dublin, Brussels, Paris, Cologne, Berlin and Madrid. Its 400+ economists tackle some of the most pressing and challenging questions faced by decision-makers, whether in sectors such as financial services, creative industries, digital media or aviation, or in relation to policy questions such as climate change, trade policy, education and health. frontier-economics.com

*Source: Walpole, Luxury in the Making, 2024