Brexit: what could it mean for the retail and consumer goods industry?
7 July 2016
We look at some of the immediate issues which arise following the EU Referendum result in relation to the retail and consumer goods sector.
On 24 June, a 52% majority of UK citizens voted to "Leave" the European Union ("EU"). The outcome of the UK’s referendum on its membership of the EU creates a number of near-term challenges and, perhaps, opportunities. The UK Government faces many decisions, including deciding when and if it will serve the UK's withdrawal notice and trigger the two-year exit negotiation period under Article 50 of the Treaty on European Union.
With 47% of the UK's manufacturing exports currently being shipped to the EU and the EU representing 54% of the UK's imports, the potential impact of Brexit on the retail and consumer industries would be significant. In the months preceding 24 June 2016, the vast majority of UK retailers spoke out to show their support for the Remain campaign, voicing concerns about the uncertainty and risks they believed would be caused by Brexit. The UK is in uncharted water and the destination is, as yet, unknown.
Whilst the practical consequences of Brexit for the retail and consumer industries depend on the agreements to be negotiated between the UK and the EU, it is important to remember that whilst the referendum result may provide a political mandate for a Brexit, its legal status is only advisory and not binding. In addition, it provides no guidance about the form which the UK’s future relationship with the EU, and the rest of the world, should take. The formal process for a Brexit would also not start unless and until the UK delivers a notice under Article 50. This would trigger a two year transitional period for withdrawal arrangements to be agreed, at the end of which (absent an agreed extension to the process or agreed changes to the effect of Article 50) the UK would automatically leave the EU.