Brexit is particularly significant for the wooden furniture sector as the UK is the largest single EU destination for this commodity imported from outside the EU. In 2015, the UK accounted for 36% of all EU imports of wooden furniture from outside the single market.
This is due to the relatively high degree of consolidation in the UK’s furniture retailing sector compared to other EU countries, and the UK’s relatively high level of openness to foreign trade and products, comparatively small domestic furniture sector, and longer distances from the heartland of EU furniture manufacturing in Italy, Germany and Poland.
Fears of economic fallout from Brexit have led to an immediate and large devaluation of the British pound against other currencies. Throughout October, the pound has been trading at around US$1.22 against the dollar, the lowest level for 31 years and 18% less than just before the Brexit vote.
At times during the month the pound also dropped below the psychologically important euro 1.10 level against the euro, its lowest level since March 2010 and 15% less than before the vote.
After a year of strong growth in 2015, the UK’s imports of wooden furniture had levelled off at the higher level in the first half of 2016, prior to the Brexit vote.
UK imports from other EU countries and from China had declined slightly during this period, but were continuing to grow slowly from the main tropical suppliers including Vietnam, Malaysia, Brazil and Indonesia.