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UK exit leaves business in a fix


Post Brexit, when the United Kingdom finally left the European Union at the end of December 2020, there were many problems for businesses working across the area. The EU-UK Free Trade Agreement is not the panacea that businesses were led to believe it would be. Although the agreement avoids duty costs, VAT still applies. Similarly, the complicated issues with rules of origin now in place coupled with increased paperwork and border checks are making it near-impossible for some brands to operate.

The fashion industry, which works extremely closely with its European neighbors, has been hit hard. A large proportion of fashion brands – particularly in the sustainable space – manufacture and source materials in Europe and 80 per cent of UK clothing exports are currently sent to the EU. Considering the complicated supply chain for many fashion goods (for example, multiple parts and materials sourced from different countries), the change in rules demanding declaration of origin is also proving problematic.

Customers in Europe who have ordered goods from the UK (and vice versa) are increasingly seeing expensive clearance orders being served when parcels arrive at the door. Customers frequently reject these steep fees and the goods are then returned to the sender. While this back and forath creates unnecessary additional emissions, the returned items often end up being wasted.