Retail sector would face more red tape if we leave the European Union, according to the Economist

Helen Cahill
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Retailers would face major problems if the country votes to leave the EU, the report says (Source: Getty)

As if the retail sector didn't have enough to deal with following the collapse of Austin Reed and BHS, it now must contend with the possibility of further losses if the UK votes to leave the European Union, according to a new report.

The report from the Economist Intelligence Unit says that rather than cutting red tape for retailers, Brexit could actually make regulation more complicated.

Brexit would lead to a drop in retail figures of 3 per cent in 2017 due to consumer uncertainty and rising prices, according to the report.

By 2020, nominal retail sale would be 6 per cent lower than if the country opted to stay in the EU.

The report reads: "UK retailers will face greater supply chain complexity and regulatory divergence as domestic sales slump while consumers wait on the outcome of negotiations.

"The supply chains and agreements that have evolved on an even playing field with partners in the EU will need to be revisited as the goal posts begin to move.

"Regulatory requirements relating to safety, quality and consumer protection that are currently consistent across member states will diverge. This will force retailers to consider two sets of rules when assessing their offering between the UK and Europe.

"Rather than cutting red tape, Brexit could make the situation even more complex for retailers seeking to offer comparable services across countries."

Several retailers have already complained about the effect of the EU referendum on the business, saying that it has dampened consumer confidence.