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What Will Boris Johnson Mean for UK Retail?

Boris Johnson, the new U.K. prime minister, promised during his leadership campaign to help “save the great British high street” from the encroachment of online shopping, but the increasing likelihood of a no-deal Brexit has fashion insiders questioning how highly British businesses actually rate on his to-do list.

“This is the U.K.’s Donald Trump moment,” Fergus Patterson, managing director, northern Europe, at Gant, told Drapers. “Are we even on Boris Johnson’s radar, in terms of business-rate reforms or pushing landlords towards thinking differently about calculating rents? I’m not expecting [U.K. businesses] to be anywhere on his agenda for the foreseeable future.”

The Tory leader had laid out a three-point plan to boost the prospects of brick-and-mortar retail by introducing planning reforms to allow easier “change of use” from retail to mixed-use or residential properties on the high street, which would increase opportunities for landlords and drive up foot traffic.

Johnson had also proposed scrapping business charges on free-to-use cash machines so shoppers can withdraw money fee-free, as well as making “immediate use” of the 675-million-pound ($840 million) Future High Street Fund to buoy high streets and town centers across Britain.

“High streets are a vital part of British life, but they are coming under increasing pressure from the rise of online shopping, especially in the more rural areas,” Johnson said in June. “We need a bold vision to rejuvenate our high streets, and to make sure that they remain places where people want to go, meet and spend their money.”

Indeed, one in every five pounds spent in British shops is now online. Recent data from the Office for National Statistics reveals that online sales now account for a record 18.2 percent of all retail sales. Store closures this year—50,828 to date—are at a five-year record high, according to the Local Data Company. (It doesn’t help that consumer confidence is at a six-year nadir, per YouGov.)

“When we leave the European Union on Oct. 31, we can make these bold changes,” Johnson said. “The high street is the heart of many towns across the country—a place for people to come together and support local business. This is an extremely exciting opportunity to revive our communities, and we should grab it with both hands.”

But a no-deal Brexit, which Johnson appears especially keen on, will only spell certain disaster for Britain’s 32.3-billion-pound ($40.2 billion) fashion industry, which employs 890,000 people. Research commissioned by Walpole claimed that a no-deal Brexit would strip the U.K. luxury goods industry of 6.8 billion pounds (48.5 billion) per year, or roughly a fifth of its current export value.

“Crashing out of the EU without a deal means that not only the tariffs and paperwork involved in shipping goods to the European block will change overnight, but so will the U.K.’s trade agreements with the rest of the world,” Caroline Rush, CEO of the British Fashion Council, wrote in an op-ed for GQ in March. “We have already lost jobs and investment in the U.K. to the EU because of Brexit.”

Others expressed concerns that a new chancellor and a new treasury could stymie existing progress with business-rate reform to reduces taxes on non-residential properties like shops and offices.

“Retailers employ 3 million people across the U.K., making the industry the U.K.’s largest private sector employer, and the burden of business rates and other public policy costs put these jobs and our high streets at risk,” Helen Dickinson, CEO of the British Retail Consortium (BRC), told Drapers.

“With retail conditions the toughest they have been for a decade, the new prime minister must act to support the successful reinvention of retail locations and local communities,” Dickinson said. “We hope the new government will commit to a full review of the broken business rate system, and collaborate with the BRC on a strategy to bolster the retail industry during this time of rapid change.”

Despite initial promises to guarantee European Union citizens the right to live and work in the United Kingdom even without a deal, Johnson has not made it clear how he would help businesses, such as fashion houses and manufacturers, which rely on skilled labor from Europe, maintain their talent pools.

“You heard him talk about the settlement scheme there,” the prime minister’s spokesperson told the Guardian Thursday. “We want people to be registered, and we’re making an unequivocal commitment to make sure their rights are protected. I don’t think there’s anything specific.”

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