The Strengthening of EU-UK Ties Could Be a Big Win for the Luxury Sector

Since the 2016 referendum, in which the United Kingdom voted to leave the European Union, relations between the two entities have been marked by tension. However, recent changes in the geopolitical landscape—notably the need to find a solution to the hostile trade policy implemented by the US administration—suggest a potential rapprochement between London and Brussels.

If the European Union takes a step towards the UK to present a united front against Trump, this dynamic could encourage a redefinition of relations, paving the way for more constructive discussions on key issues such as trade, regulation, and mobility.

The fashion and luxury sector, which relies heavily on international supply chains, would be directly affected by these developments.

With Brexit, many British brands have suffered from higher import costs and increased customs formalities. According to the recent report “Trading with Europe 2025” by Walpole—the British luxury industry body representing brands such as Burberry Group and Fortnum & Mason—the impact on the sector is £81 billion, or around €95 billion, representing a 43% drop in potential trade compared to if the UK had remained in the EU.

Among the sectors most affected, the report highlights losses in fashion and accessories (-64%). The luxury sector in England accounts for more than 450,000 jobs and contributes £14.6 billion to the public purse.

With Brexit, companies have encountered numerous obstacles and delays due to new certification requirements; they have also faced problems with VAT refunds and recovery, forcing some to absorb losses on returned goods.

As a result, the EU already accounted for less than a third of UK luxury goods exports at the end of 2022 – the year Brexit came into effect – down from 42% five years earlier.

On the other hand, exports to markets outside the EU are now almost back to pre-pandemic levels.

According to Walpole estimates, the growth potential of British luxury goods could reach around £125 billion by 2028. However, for these forecasts to be realized, trade with Europe would need to progress favorably, and the recent resumption of dialogue between Macron and Starmer, for example, sends a positive signal.

Iconic brands such as Burberry, which has struggled in recent years, and Stella McCartney could benefit from such a development, regaining lost market share. Burberry, for example, could relaunch its collections for European consumers, taking advantage of increased logistical efficiency.

If the dialogue between London and Brussels strengthens, a new era of interconnection within the fashion industry could emerge.

On May 19, the UK and the EU signed a post-Brexit agreement on defense, security, fishing, and energy; British Prime Minister Keir Starmer described the agreement as a “reset” of relations with the EU. Is this a first step toward “reconciliation”?