It showed that between 2013 and 2017, the sectors grew at an annual average rate of 9.6%., more than double that for the UK economy as a whole. The overall size of the sectors is at around 2.4% of UK GDP. The sectors are heavily export oriented, with exports accounting for around 80% of the value of overall sales.
The export orientation of the industries means that developments in global markets are of particular importance to UK luxury producers. A “hard Brexit”, in which the UK and EU revert to trade with each other on most-favoured nation (MFN) terms, would affect a number of luxury sectors, such as cars, clothing and food, because tariffs on these products are well above the current EU average MFN tariffs, and well above duty-free rates currently applying to UK-EU trade.
Looking further afield, protectionist policies followed by the US could have significant effects too. These may be direct, if the US chooses to impose tariffs on automobiles, or indirect, if a trade war between the US and China causes a slowdown in the latter, which has been one of the fastest growing markets for UK luxury.
Frontier Economics works on international trade policy issues and their impacts on specific sectors.
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