£2.3bn would be cost of hard Brexit for non-food UK retail sector

By

Barbara Santamaria

Published
Dec 12, 2018

It has been a turbulent past few weeks for the UK political and economic climate, and with PM Theresa May facing a vote of no confidence on Wednesday, the future of her Brexit remains uncertain.

Political differences on the terms of leaving are making it hard for the UK government to get a draft agreement approved, making it unclear what shape Brexit will take.

But according to a new report from GlobalData, a leading data and analytics company, the UK non-food retail sector would see £2.3bn wiped off its total value in a hard Brexit scenario, compared to a Brexit based on May’s withdrawal agreement.

Concerned about the nation's economic prospects and due to inflated food prices, consumers are expected to reign in their spending in a ‘no deal’ or hard Brexit.

“In the light of recent developments, retailers are coming to terms with the fact that there is a real need to plan for a hard Brexit scenario, with an end to free trade and no customs union between the UK and the EU. Increased tariffs, delays at ports and borders and a sharp fall in the pound, pushing up the cost of imports, would all have a negative impact,” Karla Rendle, senior retail analyst at GlobalData, commented.

The report showed that a hard Brexit would be more damaging than either an exit based on the Withdrawal Agreement or a delayed Brexit/second referendum scenario.

“November witnessed the worst level of consumer confidence over the last four years with 55.4% of consumers surveyed expecting to cut back spend on retail over the next six months. In the build up to Brexit we have seen this get steadily worse as consumers have become more negative about the outlook of the economy, their own personal finances and their likelihood to spend on retail. This, at a time when the UK is relying on its golden quarter to stimulate retail sales, is particularly concerning,” Rendle continued.

Thomas Brereton, retail analyst at GlobalData, said that hard Brexit would be “disastrous” for non-food retailers, who would bear the brunt of shoppers cutting back on spending. Non-essential big-ticket, such as furniture and electricals, are likely to be hit hardest.