A Frontier Economics report, commissioned by Walpole, the representative body for the UK’s luxury industries, was released today and looks into the sectors’ performance and prospects.
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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