Brexit - A Retail Industry Perspective
For the majority of businesses in Britain, the possibility that the UK might leave the European Union (EU) is a major source of concern. It is argued that both the break with the EU, and the uncertainty associated with it, would be damaging for businesses and could undermine the UK’s economic recovery.
In reality, should Britain leave the EU, the severity of the impact would depend on the new relationship that emerges between the UK and the EU after a vote to leave. Put simply, no member state has ever left the EU so there is no precedent set for guidance. If the UK votes to leave the EU it is also unknown what arrangements will be agreed to replace the EU membership, however, there are likely scenarios which may develop.
The UK’s current membership of the Single Market means that UK retailers can import and export goods “tariff free” within the EU or with little or no customs procedures and restrictions. So when it comes to Brexit, what are retailers themselves saying? A letter signed by almost 200 business leaders in late February – including the bosses of Asda, M&S, Dixons Carphone and Kingfisher – warned that leaving the EU would “deter investment” and “threaten jobs”. Meanwhile three of Britain’s biggest supermarkets - Tesco, Sainsbury’s and Morrisons, refused to sign the letter. "The referendum on EU membership is a decision for the people of Britain," said Tesco in a statement, with similar sentiment echoed by Sainsbury’s and Morrisons.
In the event of a vote to leave the EU, this paper examines the possible arrangements that may be negotiated and the possible macroeconomic effects and implications this could have for the retail industry.
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