The UK chooses Brexit: trouble for the leather industry?

Many burdens and a few honors. The United Kingdom decided to leave the EU with a referendum that took place on June 23rd. This decision leads to trouble for the Italian leather sector. Initial reactions to Brexit are critical. Prime Minister David Cameron announced his intention to resign within October. Exchanges have given immediate negative feedback: Frankfurt opens at -9.94%, -7% in Paris, London -8% and Milan -11%. The value of the pound has fallen to its lowest value since 1985. Repercussions for the British fashion industry are expected, which in 2014 contributed to the national economy with 38 billion euro, and for luxury brands listed on the Stock Exchange. Currency fluctuations complicate the plans of Italian companies, which sell more than what they buy in the UK, and whom are penalized by the strengthening of the euro. Tanneries may derive some benefit in the purchase of raw and semi-finished leather, but they will also meet one more hurdle in the sale of the finished material (although 2015, after a successful biennium, the export of leathers in the UK contracted 11% in volume and 7% in value). The outlook isn’t better for other manufacturing sectors. Footwear for example, which in 2015 saw the UK’s fifth largest market (with 5% increase of exports of leather products) with levels of marginal imports. Same for leather goods, which in London is the sixth market in value and the third by volume (last year the export of leather goods grew by 1%). Market conditions are bound to change, but not for the better.


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