That’s just what Theresa May’s government and lawmakers have forced businesses and consumers to do as they struggle to find a viable way out of the European Union following 2016’s divisive Brexit referendum. Investors, retailers, brands and consumers have been hanging on to their detriment and could be doing so for a lot longer unless May’s controversial, unpopular withdrawal deal passes by March 20 or members of Parliament come up with an alternative pronto.
May also has to ask all 27 EU nations to grant Britain an extension of the official Brexit deadline of March 29. If the EU decides not to, which right now seems unlikely, Britain will crash out, deal-less and with more chaos in store. What seemed like a great idea to 51.9 percent of the voters in 2016 has spelled trouble for businesses and consumers alike, causing fear, anxiety and confusion.
While the plummeting pound, which was trading at $1.48 before the 2016 referendum, $1.30 immediately afterward, and is hovering around $1.32 may have been a boon for tourism and luxury sales in London, it has pushed sourcing and manufacturing costs for British businesses through the roof and dented smaller fashion brands in particular. The U.K.’s decision to leave and the interminable withdrawal negotiations have cost businesses money, time and energy and forced them to play an unpalatable waiting game.
Preparing for a no-deal Brexit and a default to World Trade Organization tariffs of 12 percent on clothing imports from the EU has been a distraction for businesses. According to George Wallace, chief executive officer of the consultancy MHE Retail, bosses have been left “scratching their heads and thinking, ‘I’ve got to investigate alternative suppliers, I’ve got to look at different storage warehousing, receiving and logistics.
Consumers, too, are spooked, shunning stores and counting their pennies: According to Springboard, which measures U.K. retail footfall, last month was the weakest February in the past five years, with footfall dropping by 2 percent. Commenting on the February figures, Helen Dickinson, ceo of the British Retail Consortium, said while real incomes have been rising over the last year, "uncertainty surrounding Brexit appears to be driving a needs-not-wants approach to shopping.”
A marathon three days of voting last week may have bought Britain time for May to build a consensus in Parliament for her deal, but it has done little to reassure businesses, investors and consumers alike.
“There is an overarching need for certainty, and we need a deal done. What we have now is a sense of paralysis,” said Jace Tyrrell, ceo of New West End Company, which represents some 600 businesses on and around Bond, Oxford and Regent streets, one of London’s largest tourist hubs. Tyrrell, who has just returned from MIPIM, the big real estate show in Cannes, said he was speaking to investors from around the world who are eager to pump money into London commercial property, but they’re holding off for now.
“They want to do deals, but they need to know they’ll get retailers and occupiers in their properties. There’s this sense that everyone is in a holding pattern,” he said. In London’s West End, the mood is the same, according to Tyrrell. Over the past two years, 50 new brands have landed on the streets that Tyrrell represents, but the bulk of those openings happened when the Brexit negotiations had only just begun. “Of the 50 openings, only 15 happened last year. People are holding off on business decisions, and they’re also concerned about the movement of people and goods.”
On a brighter note, due to the drop in the pound, Tyrrell said the West End will see a "Brexit bounce," banking 9.2 billion pounds in sales in 2019. Brexit has also proven a prolonged distraction for May’s government.
Although day-to-day business has rolled on, with the Chancellor of the Exchequer Philip Hammond presenting his spring budget last week, which included 100 million pounds to tackle knife crime and hundreds of millions of pounds earmarked for affordable housing, pressing issues for retailers have been put on the back burner, according to Tyrrell.
Those issues include an updated digital tax-free shopping system (rather than a paper-based one) that would attract — rather than confuse — international customers, and extended Sunday trading hours for retailers in central London, which are paying some of the highest rates of business tax in the country.
Tamara Cincik, founder and ceo of Fashion Roundtable, a fashion industry organization that seeks to highlight problems and potential solutions stemming from Brexit, said she’s worried in particular about small, independent businesses that are struggling to cope with all of the potential changes that Brexit will bring.