How Brexit Will Impact The Interior Design Industry
So, Brexit has happened and we must all grin and bear it. On first glance, we thought we might get away fairly unscathed – we work mainly with UK suppliers, and our foreign imports tend to come from the US. But just because you are dealing with a UK company doesn’t mean you aren’t directly benefiting from the free trade links across the Eurozone.
The majority of fabrics and textiles used in the UK are manufactured in Italy. Even if they are woven in the UK, the thread and dyes tend to be continental. Furniture designed and produced in Italy often uses British woods, so you’ll be paying for items to go through customs twice!
Goods entry points will require monitoring. There will be a huge added tonne of paperwork, for the items themselves and for the logistics teams – you won’t just be able to send any driver, you’ll need to link the driver, with a business visa, to each individual shipment, which adds time to each individual journey, and in business time is always money. Import and export taxes will change on most items, but as trade negotiations haven’t begun (and we’re a country who’s never had any need for them before, so it’s not an industry ready to jump into action) we simply cannot say what will increase or decrease at this time.
So the cost of most European goods will increase, as will the lead and delivery times.
Then there is the exchange rate. At the moment the pound is plummeting. Overnight goods from Europe went up 20%. Hopefully the pound will settle in the coming months, and while it is likely it won’t be as strong, it will at least be less volatile and therefore customers, rather than intermediary businesses, will be taking the brunt of the increase. Trade quotes last for, on average, 60 days, so anyone who quoted last week will personally be out of pocket 20% for the coming month.
Many of our clients are stationed here by larger international companies, as a European office. That will most likely change and they will all get relocated to Paris or Berlin.
Many of our builders and tradesmen come from Eastern Europe. Whilst they should be able to secure working visas, it is likely that setting up a company and having a flexible workforce will be far more challenging in the future.
Hopefully it won’t all be bad for the Interior Design Industry. Non European buying power has gone up. Our UAE client who paid for his kitchen this morning got it 15% cheaper than he would have done last week. The weak pound will attract lots of foreign investment from people who are more than happy to sit out any slump or recession.
We will also be open to new trading agreements from the rest of the world. The USA and South East Asian imports were previously subject to large import taxes as they failed to agree with deals set by the EU. So all those lovely leisure brands the Americans have been enjoying, like Restoration Hardware, should be free to ship here more cheaply. That should also encourage continental Europe to purchase those goods from us, rather than directly from their country of origin at an inflated rate.
There are bound to be further ramifications, and as no trade or migratory agreements have been made yet, only time will tell as to scale of impact. These are turbulent times for everyone in any industry in the UK and we will just have to sit tight and see.