The British fashion industry occupies a peculiar position in the global economy: simultaneously celebrated as a creative powerhouse and besieged by structural instabilities that threaten its foundations. With a direct economic contribution of £26 billion and a workforce of 710,000, fashion and textiles represent one of the UK’s most significant cultural and economic assets. Yet beneath the glamour of London Fashion Week and the prestige of Savile Row lies a sector in crisis – fragmented by policy, undermined by trade disruptions, and caught between the competing demands of creativity and manufacturing.
The geometry of British fashion has always been unstable. It is an industry that straddles two worlds: the high-value, image-driven realm of design and luxury, and the labour-intensive, margin-squeezed reality of domestic production. For decades, this duality has been managed through global supply chains that shipped production to low-cost countries while keeping the brand and the marketing at home. That model is now collapsing under the weight of tariffs, geopolitical instability, and a post-Brexit trade landscape that has made every transaction more expensive and every decision more uncertain.
The Tariff Shock
The most immediate threat to British fashion comes from the United States. The imposition of IEEPA tariffs and the effective removal of De Minimis rules have disrupted supply chains that many businesses relied upon for years. Brands that had refocused on the US market using both business-to-consumer and business-to-business models, often depending on De Minimis thresholds to keep costs manageable, have been hit hardest. The increased cost of every shipment has unset entire supply chains, forcing companies to reconsider not just their pricing but their fundamental business models.
The timing could not be worse. Factories across China, already weakened by insufficient support during the pandemic, are under intense pressure. India faces even higher tariffs, with no clear indication of future US trading viability. Brands are preparing for disruption to spread across multiple sourcing countries simultaneously – a scenario for which few have contingency plans.
Meanwhile, UK manufacturers have been struggling with additional costs and a lack of orders to sustain their businesses. The recent National Insurance increase, described widely as a “tax on jobs,” has compounded the problem, raising the cost of employment at precisely the moment when the sector can least afford it. The result is a domestic manufacturing base that is shrinking at an alarming rate: the number of businesses in the clothing manufacturing industry has declined at a compound annual rate of 2.1% between 2021 and 2026, and revenue is expected to contract by 2.5% annually over the same period.
Brexit’s Long Shadow
The fallout from Brexit continues to reverberate through the fashion industry. The relocation of production into the EU, the administrative burden of customs compliance, and the unfamiliarity of new trade arrangements have created a persistent drag on competitiveness. Many businesses that once considered the EU a seamless extension of their domestic market now face tariffs, VAT complications, and regulatory divergence that make every cross-border transaction more costly and time-consuming.
The problem is not merely logistical. It is psychological. Uncertainty erodes confidence, and confidence drives investment. When businesses cannot predict their costs, their market access, or their regulatory environment six months ahead, they stop investing. They pause hiring, defer equipment purchases, and reduce the risk-taking that drives innovation. The fashion industry, which depends on bold creative vision and willingness to experiment, is particularly vulnerable to this contraction.
According to a 2026 report by Fashion Roundtable, the sector’s fragility is not driven by a lack of capability, demand, or entrepreneurial activity, but by “structural instability produced through fragmented governance, short-term policy interventions and weak coordination across policy domains.” Fashion and textiles occupy an ambiguous position between creative industries and manufacturing, resulting in dispersed responsibility across departments and levels of government. This hybridity, often framed as a strength, has in practice limited the sector’s visibility within industrial strategy, inward investment, and innovation policy.
The Manufacturing Dilemma
The debate over onshoring – bringing production back to the UK – has gained urgency in recent years. Two 2025 reports, led by the Circular Fashion Innovation Network and the UK Fashion and Textile Association, argue that a blend of far-shoring, near-shoring, and onshoring could offer the sector long-term economic, social, and environmental benefits. Onshoring promises shorter lead times, greater flexibility, faster responses to evolving consumer trends, and more sustainable production.
But the promise is easier to articulate than to deliver. UK manufacturing costs have risen significantly, driven by higher utilities, labour, and tax costs. The competitive pressure from countries gaining preferential access through trade agreements – particularly the upcoming India trade agreement – threatens to undercut domestic producers further. Factories that survived the pandemic and Brexit are now facing a third wave of disruption, and many are reconsidering the viability of UK production beyond 2026.
Public procurement has been identified as the most significant underutilised lever for stabilising domestic production. Across industry interviews, procurement is repeatedly cited as one of the few policy tools capable of delivering predictable demand at scale. Where procurement frameworks have supported local or regional production, they have enabled manufacturers to plan, retain staff, invest in skills, and improve labour standards. Conversely, fragmented, opaque, or scale-biased procurement systems have reinforced precarity and excluded smaller suppliers.
The UK Government’s June 2025 Trade Strategy announced a review of responsible business conduct, focusing on global supply chains and considering human rights, labour abuses, modern slavery, and environmental harms. But the mechanisms intended to deliver these objectives have not consistently reached the SMEs, manufacturers, and intermediaries that underpin domestic production.
Skills and Workforce
Skills retention emerges as a critical challenge, though it is best understood as a consequence of instability rather than a discrete policy failure. When manufacturers cannot guarantee long-term orders, they cannot invest in apprenticeships, training, or workforce development. The result is a skills gap that widens with each round of disruption, making it progressively harder for the industry to rebuild when conditions improve.
The fashion workforce is ageing. experienced machinists, pattern cutters, and textile workers are retiring, and the pipeline of younger workers entering the industry has slowed to a trickle. The reasons are predictable: low pay, uncertain prospects, and the perception that manufacturing is a declining sector with no future. Reversing this trend will require not just training programmes but a fundamental revaluation of what manufacturing work means and what it pays.
The creative side of the industry faces its own challenges. London Fashion Week remains a global showcase, but the designers and brands that populate it operate in an increasingly precarious economic environment. Rising costs, shrinking margins, and the relentless pressure of social media have created a landscape where even successful labels struggle to sustain themselves. The gap between creative ambition and commercial viability has never been wider.
The Path Forward
The British fashion industry is not doomed, but it requires intervention that matches the scale of its challenges. Industry bodies such as UKFT, the British Fashion Council, and the Circular Fashion Innovation Network have articulated clear policy recommendations: longer-term procurement contracts, clearer forecasting, accessible contract sizes, improved payment terms, and a coherent industrial strategy that recognises fashion’s dual identity as both creative and manufacturing sector.
The removal of barriers to public sector procurement of textiles could, according to a 2023 UKFT and Oxford Economics report, increase GDP by £3.1 billion, support an additional 64,000 jobs, and generate a further £1.2 billion in tax revenues. These are not marginal gains. They represent a significant opportunity to stabilise the sector and create the conditions for sustainable growth.
But policy alone is insufficient. The industry must also reckon with its own internal contradictions: the tension between speed and sustainability, between global ambition and local commitment, between the desire for cheap production and the need for fair wages. These tensions are not new, but they have become unsustainable. The geometry of British fashion must be redrawn – not as a triangle of competing interests but as a more balanced polygon in which creativity, manufacturing, and policy work in concert rather than in conflict.
An Industry at a Crossroads
British fashion stands at a moment of genuine peril and genuine possibility. The old model – design at home, manufacture abroad, sell globally – is breaking down. The new model has not yet emerged. What lies between is a period of instability, experimentation, and hard choices.
The talent is there. The heritage is there. The infrastructure, though diminished, is still functional. What is needed is the political will, the strategic vision, and the industry solidarity to build something more resilient than what came before. The geometry is unstable, but geometry can be redesigned. The question is whether the will exists to pick up the pencil.
For more on the business of fashion, explore our analysis of sustainable fashion and the circular economy and the future of UK manufacturing.
