Retail and Brexit - it's been an eventful week

The latest figures reported in The Retail Bulletin indicate that consumer mood is dipping, due to concerns about the wider economy in the run up to Brexit.

In contrast, high street retailer Next is bucking the trend and has increased its annual profit forecast. On the subject of Brexit, Next says there are "significant challenges" in preparing for a no-deal scenario and identifies port delays, increased tariffs and currency movement as being key challenges. Notably, consumer confidence does not make the list and Next is optimistic that the risks do not pose a "material threat" to it. It says its contingency plans are well advanced, should the clock chime 11pm on 29 March next year without a withdrawal agreement in place.

In other news, retailers and landlords alike will be charting with keen interest the progress of a landmark court case: The European Medicine Agency ("EMA") is attempting to terminate its £13m a year lease, which is otherwise due to run until 2039, on the ground that the lease will be frustrated by the UK leaving the European Union. Generally, an event capable of amounting to frustration is one that occurs after the contract has been completed and renders performance impossible, illegal or radically different from that originally contemplated by the parties. It is rarely (if ever) successfully argued that a lease has been frustrated. EMA, which is relocating to Amsterdam, contends that it is implicit that an institution of the EU must be based within the EU. A key question in the case will be whether the possibility of Brexit was foreseeable when, in 2011, EMA contracted to enter into the lease with Canary Wharf. It could be argued that Brexit wasn't entirely foreseeable on the eve of the referendum itself, let alone in 2011! That said, most commentators feel confident that EMA is unlikely to succeed. If it does and the floodgates are opened, there may be a long queue of retail tenants attempting to rid themselves of onerous leases on Brexit-related grounds.

New figures have shown that consumer confidence has fallen in September as people feel more uncertain about the economy in the run-up to Brexit.”