The UK will hold a referendum on June 23 to decide if it will stay in or leave the European Union. At present the debate is a close one with just over half at present favouring a ‘stay’ vote.
So what would it mean for the Irish Retail Sector if Britain were to withdraw from the EU (or ‘Brexit’ as it has become commonly known as)?
Many of the high street stores we visit on a daily basis see are UK-based retail chains, such Marks & Spencer, Boots, Next and Tesco. Typically, these chains supply their stores from a central distribution warehouse where a single large delivery supplies all the daily/weekly needs of these individual stores. This is far more efficient than having every manufacturer and wholesaler make deliveries to individual shops and has enabled retailers to dramatically cut costs and in turn, prices for their consumers.
If the UK leaves, it is likely we will have to implement EU customs controls on everything coming from the UK.
If Brexit were to occur, these large deliveries/containers would have to pass through customs who would check what duties were applicable on each of the products in the container…a process that could take an inordinate amount of time.
For many of our stores, EU customs barriers would make the current retail model unsustainable and, even if the firms persevered, the time delays and expense of such a change would be significant.While Irish customers might not care about the misfortunes of British retailers, they would certainly care about the major increase in prices which the new regime would entail.
Customers may also have to wave farewell to some of their favourite UK high street stores. These retail chains may be required to establish specific (and expensive!) channels to get their products to Ireland without having to clear customs and as a result, some may decide to shut their Irish operations completely.
Irish Retailers currently exporting to the UK could also suffer as it is likely that the UK governments will give precedence to producers in their own countries when buying goods or services.
Brexit poses a clear threat to the Irish Retail Sector as it currently operates.
(Source: Irish Times Online)