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Firms from fashion to aviation face a Brexit hit if no trade deal: peers

UK industries from fashion to aviation face "serious harm" if the UK fails to reach a comprehensive free trade agreement with the European Union, peers have warned.

A report by the House of Lords EU Internal Market Committee focused on the impact of Brexit on the non-financial services sector.

It said these industries represented around a third of UK exports, at £162bn, and were in surplus - meaning they make more sales overseas than imports - and played a key role in growth and jobs.

Aviation and broadcasting industries could be among those badly hit as they have no World Trade Organisation arrangements to fall back on if the Government walks away from the EU with no deal.

It could mean UK broadcasters losing the right to sell programmes into European markets and UK airlines relocating to Europe, while throwing into doubt events such as London Fashion Week, the report warned.

While the services sector was unlikely to be hit by tariffs after Brexit - which it is feared could be imposed on the goods trade - other barriers might be erected.

These could not only increase the cost of business but even stop UK companies from trading in key markets altogether, the report warned.

Without a deal, UK airlines could lose their right to fly to and from Europe or operate within the EU, while there might even be doubts about flights to the USA, currently governed by the EU-US Open Skies agreement, it added.

Easyjet (Frankfurt: A1JTC1 - news) has already taken steps to establish a European certificate.

Meanwhile, the British Fashion Council warned of the impact of the possible loss of EU protections from copycat designs.

It told peers this could lead to "effectively closing down London Fashion Week as a platform to promote British businesses".

The committee also warned that continued movement of workers and service providers into and out of the UK was regarded by the services sector as "necessary to support growth".

Services represent more than three quarters of UK output and the sector led the UK economy out of recession following the financial crisis.

The committee urged ministers to prioritise securing a transitional deal to be in place between the expected Brexit date in 2019.

That would allow more time to reach a free trade agreement which would "almost certainly take more than two years" to negotiate.

Committee chair Lord Whitty said: "The UK is the second largest exporter of services in the world and the EU receives 39% of the UK's non-financial service exports.

"This trade is critical to the UK's economy as it creates employment and supports goods exports - we can't afford to lose that."

A Government spokesman said it was pursuing a "bold and ambitious free trade agreement" and believed there should be a "phased process of implementation" for Brexit.

The report follows a separate Lords committee investigation into the impact of Brexit on the goods trade between the UK and EU.

There are also continuing fears over the effect on banking jobs with Goldman Sachs (NYSE: GS-PB - news) saying on Tuesday that it was ready to trigger plans for hundreds of jobs to be moved out of London before any Brexit deal is struck.