Brexit Held Responsible for Decline in UK Beauty Exports to the EU

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UK (Parliament Politic Magazine) – A report from a prominent economic forecasting organization reveals that Brexit has resulted in an £850 million decrease in the value of the UK beauty industry’s exports to the EU. The study, commissioned by the British Beauty Council, attributes this decline to customs delays and the increased expenses associated with cross-border trade, both of which have negatively impacted sales.

The report, authored by Oxford Economics, compared the export of beauty products to the EU with exports to the rest of the world, uncovering a reduction in sales within the single market while sales elsewhere remained stable. 

COVID-19 Has Also Contributed To The Sector

Notably, small businesses, which constitute a significant portion of the beauty sector, have been disproportionately affected by trade barriers. Additionally, the diminished availability of EU workers has led to a shortage of skilled labor in the industry.

The COVID-19 pandemic has also impacted the sector, but the report, sponsored by brands such as L’Oréal and Space NK, highlighted a divergence in the performance of exports between the EU and the rest of the world.

From 2010 to 2016, the year of the Brexit vote, UK exports of cosmetics and other personal care products were increasing by 3.1% and 5.3%, respectively. However, exports to the EU have been on a downward trend since that time.

Millie Kendall, the CEO of the British Beauty Council, emphasized, “COVID-19 is not the issue; Brexit is the underlying challenge. People have withdrawn from these markets.”

A recent survey conducted by the British Chambers of Commerce and released earlier this week reveals that 49% of UK exporters have faced challenges in adjusting to the necessary changes for maintaining their pre-UK-EU trade deal export levels.

A Decrease In The Export Activities 

According to the BCC, the survey encompassing 2,000 small and medium-sized exporters indicated that half of them have experienced no significant shifts in the past three months, while one in four reported a decrease in their export activities.

The persisting economic pressures on the global scale have kept many businesses’ export efforts subdued, as highlighted by the business advocacy organization. They also noted that the UK’s export levels have remained largely static since the onset of the pandemic.

The report indicates that the percentage of businesses reporting a decline in sales began to deteriorate in the lead-up to Brexit and has persistently remained at elevated levels.

William Bain, who serves as the head of trade policy at the BCC, emphasized that for UK businesses to flourish, an essential step is to increase their exports. He stated, “It’s as straightforward as this: if we wish to maintain our status as one of the world’s leading economies, we must have a greater number of companies engaged in the international trade of goods and services.”

 He further pointed out that challenges such as the pandemic, disruptions in the supply chain, Brexit, non-tariff trade barriers, and global economic challenges have collectively made this endeavor more challenging over the past few years.

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UK Beauty and Personal Care Industry’s 2022 Economic Contribution: £24.5 Billion

In 2022, the beauty and personal care industry made a £24.5 billion contribution to the UK economy, representing a 28.1% decline compared to pre-pandemic levels, as reported in the British Beauty Council’s recent “Value of Beauty” report. The COVID-19 pandemic caused disruptions that resulted in a reduced GDP contribution, but the report underscores the industry’s ongoing recovery.

Of the total contribution, over half (£12.3 billion) was solely attributed to retailers, wholesalers, and manufacturers, while an additional £4.9 billion in economic activity was generated through the industry’s domestic supply chain purchases in the past year.

 The professional sector emerged as the second-largest contributor to UK economic growth in 2022, with a total of £5.1 billion generated during the year.

The British Beauty Council stated, “The challenges posed by the COVID-19 pandemic led to a 28.1% decline in the direct GDP contributions of the personal care industry from 2019 to 2020. However, since then, the industry has demonstrated signs of recovery, with stronger growth in direct GDP contributions compared to the retail and wholesale sectors.”

The “Value of Beauty” report, first introduced in 2019 to assess the evolving economic impact of the beauty industry, was produced in partnership with global forecasting firm Oxford Economics

Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.