How Could Brexit Affect UK Retail?
Wednesday, 18th May 2016
Reports from the likes of Moody's and the British Retail Consortium have fuelled the ongoing debate surrounding Brexit's effect on the UK retail sector. Merely the uncertainty of the post-Brexit landscape could spur an economic retrenchment made worse by increased barriers to trade, prolonged investment decisions, and shifting migration policies.
A shortfall in overseas workers?
In particular, food and drink companies will feel the hit from a lack of EU workers with lower wage expectations. In 2014 the UK’s largest sandwich manufacturing company, Greencore, attracted media attention when they were found to be actively recruiting staff from Hungary to fill gaps in their workforce. Were the UK to leave the EU, cross-border recruitment practices like this would frequently be frustrated because of the associated changes to immigration law.
The new living wage
Service industries may also feel impinged upon by the government’s introduction of a £9 hourly living wage, which is planned to come into effect by 2020. Moody’s added that ‘services companies frequently refer to the ability to attract and retain workers as a key business risk and those with a high proportion of EU nationals among the workforce would be most affected by a Brexit.’
Small and large businesses: differing opinions
Many national retailers are keen for the UK to remain part of the EU. Marks & Spencer, Dixons Carphone, Burberry, Kingfisher, Kurt Geiger, Mothercare, Ocado, Ann Summers, and ASDA all signed up to the remain campaign. There are many large retailers, however, who have taken an impartial stance, as they do not wish to appear biased either way. Earlier this year YouGov conducted a poll for The Times which showed that 96% of big businesses would like to remain in the EU, compared to only 47% of SMEs.
How will retailers choose to vote?
The British Retail Consortium published a report last year titled ‘Would Brexit be Better for Retail?’ Also keen to remain impartial while exploring both sides of the debate, the report’s authors examine the effects Brexit would have on trade practices; retail and wholesale pricing; the mechanics of new regulations; investment opportunities and financial implications; the changing labour market; and a possible timeframe. It may come as little surprise that, according to the report’s conclusions, retailers are most likely to support the decision that allows for the best access to competitive retail markets in the UK and abroad.