Walpole commentary | Au revoir but not good-bye – Brexit day and British luxury
Walpole was in Brussels this week, representing UK luxury as part of ECCIA (the European Creative and Cultural Industries Alliance), at a presentation to the European parliament of a new study examining the contribution of luxury and high-end brands to the European economy and culture. Although the focus was on the €800 billion value of the luxury sector, the conversation inevitably turned to the week’s big issue – Britain’s official exit from the European Union.
Today might be Brexit day, but it’s also the beginning of an eleven month transition period as negotiators from the EU and UK work together to decide how Britain and the EU work together, not least when it comes to trade.
The full picture of the UK’s future with the EU may remain blurry for some months, but one thing is clear – British luxury is, and will continue to be, a key part of luxury in Europe.
The European nature of the luxury sector, and the heavily integrated relationship the UK has as part of Europe (regardless of membership of the political institution), is reinforced by the ECCIA study, conducted by Bain & Co.
The ECCIA, of which Walpole is a founder member, is an alliance composed of the five national European luxury goods and creative industries organisations who between them represent over 600 brands and cultural institutions – the equivalent of almost 80% of the global luxury market. Key findings presented in Brussels earlier this week reinforce the value of luxury and high-end brands to the whole European economy –
– The sector contributes nearly €800 billion in revenue annually to the European economy and now accounts for 4% of European GDP.
– It has grown at a rate of 32% in four years between 2014 and 2018.
– The sector employs over 2 million people in Europe and created 300,000 jobs in Europe between 2014 and 2018.
– Exports in the sector represent 10% of Europe’s total exports in 2018.
Beyond the top-line numbers, the research also examines the socio-economic and cultural benefits generated by the European luxury sector such as tourism, investment in education, skills and cultural patronages.
Crucially, at a time when the spotlight is so firmly on Britain’s role in Europe, the report highlights how the integration of the European luxury industries goes far beyond the formal structures of the EU. The business model is characterised by key business and creative hubs from London to Paris, Milan to Berlin, Geneva and Madrid and a supply chain which spans a unique European network of artisans and craftspeople with specialist expertise in regions from Elgin in Scotland to Grasse in France, Basel in Switzerland to Tuscany in Italy. There is also a flow and exchange of creative, business, retail and hospitality employees around Europe who may have been educated and subsequently employed in businesses across multiple countries and who feed the European luxury ecosystem.
The distribution chains are also completely interwoven with a system of partners and retailers moving products across the capitals and cities to both physical stores and digital players. Particularly important for the high-end and luxury sector is the network of European capitals of London, Paris, Milan, Madrid, Geneva and Berlin, which play a huge role in attracting tourists from around the world.
There is no doubt that trade challenges lie ahead. Not least, the introduction of friction in the form of tariffs or of new administrative burdens around the movement of goods and delivery of services will be an unwelcome and additional cost on luxury businesses used to trading freely across the channel.
Likewise, it has never been more important that the British luxury sector continues to have a voice in Europe through the ECCIA, and with a number of Walpole member brands under European ownership our dialogue will focus on the shared interests and values that unite our sectors across borders. Brexit also serves as extra motivation for Walpole to fight even harder to ensure that UK luxury is recognised by the British government and given the same status it is afforded in Europe, and this timely study is a helpful tool to allow us to articulate how important maintaining and strengthening these ties are for our global trading relationships.
Walpole will host a panel discussion with luxury leaders from Britain and continental Europe at the Future of British Luxury Summit next Tuesday 4th February to explore the findings of the report – in the meantime, you can read ‘The contribution of the high-end cultural and creative sectors to the European Economy’ here and the press release here.
Walpole’s vision is to make Britain the very best place in the world to grow a luxury brand – there will be challenges ahead, of course, but there will also be opportunities, not only for British luxury brands but also for the business of luxury in the UK, as we promote what makes British luxury exceptional, and also celebrate the strong, long-standing relationships we have with European luxury brands. And on this historic day, perhaps the final word should go to EU President, Ursula von der Leyen, who, in her speech as the EU Parliament voted to ratify the UK’s departure, quoted George Eliot: “Only in the agony of parting do we look into the depth of love”.
Please contact Carly von Speyr with any enquiries.