Brexit worries for Swiss watchmakers

The Brexit uncertainties have added to a long list of economic worries for the watchmaking sector Keystone

Swiss watch exports are set to fall by 10% this year, according to the Federation of the Swiss Watch Industry. Demand for luxury watches will suffer due to additional uncertainties linked to the British vote to leave the European Union, and to the stronger Swiss franc.

This content was published on June 30, 2016 - 11:58 with agencies

“The British vote to leave the European Union, the so-called Brexit, is increasing uncertainty and putting pressure on the Swiss franc,” Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, declared on Thursday ahead of the organisation’s annual meeting.

The slowdown in the watchmaking industry that has been felt since mid-2015 should continue, especially following the negative developments in the North American market since January, which Pasche calls a “bad surprise”.

Britain is the seventh biggest destination for Swiss watch exports. Pasche said that in recent times, the British market was fairly stable after a period of strong growth.

“We’ll see how firms adapt their prices and margins,” he commented. “We are hopeful and trying not to be being totally negative.”

His main concerns are linked to the franc, which grew stronger at the news of Britain’s vote to leave the EU on June 24. The euro fell from a peak of CHF1.10 to just above CHF1.06 against the franc. The exchange rate is now CHF1.08. Pasche has called on the Swiss National Bank (SNB) to intervene to keep the franc’s value in check.

“This vote opens a period of great uncertainty, which adds to many other areas of uncertainty,” he declared.

In the latest official figures, the Swiss watch sector’s exports showed disappointing results in May, down -9.7% compared to the previous year. Swiss watchmakers have recorded four consecutive quarterly falls.

Demand for luxury watches has been hit by a Chinese government crackdown on bribery, a drop in tourist shoppers to Europe, and the rise of smartwatches.

Watch giants like Swatch Group, Richemont and LVMH have responded by demanding price cuts from suppliers and taking more production in-house.

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