It would be a brave (or foolhardy) person who would try and predict at this early stage what the final economic and political outcome of Brexit will be. The truth is, we don’t know.
But industry trade organisation the Clarity Alliance, which represents manufacturers, retailers and distributors in the hi-fi sector, has been trying to make sense of what may lie ahead, for consumers and manufacturers alike.
The list of questions racing through people’s minds is growing by the day, says Clarity. Will we be plunged into another recession, hitting sales of luxury goods? Will the markets recover from a temporary blip and quickly return to normal? Will prices have to go up? Will lower interest rates lead to cheaper credit so making products easier to buy?
“One thing is for certain and that’s the uncertainty that has been caused,” says Clarity. “It’s bound to hit purchases of luxury goods in the short term as spending is always more considered when major events occur. So hi-fi, home cinema and custom installation are likely to take a hit for a period of time.”
Given that many hi-fi and AV products are imported from abroad, the prices of those items could rise. “Not only are they more expensive to import because of the currency situation, they become more expensive to sell as the trade and retail prices have to go up in order for the distributor and retailer to make a living margin,” Clarity says.
Charlie Brennan, managing director of Arcam, adds: "In the short term the collapse in sterling will impact on most companies' prices and this will happen very quickly. There will be a drop in consumer confidence and footfall as a result of the huge uncertainty the country faces over the next couple of months.
"On a more positive note I have noticed that higher quality products tend to fare better during tough economic times and that bodes well for companies like Arcam."
Dr Trevor Wilson, managing director of Naim Audio, says: "It's the longer term effects that are more significant. The UK hi-fi industry is good at making good quality, high-end products, but if the EU gets favourable trading status (or certification commonality) to the USA for example, then this could materially damage the UK industry's competitiveness.
"That said, with so many creative people in the business, ultimately the industry will find a way to adapt and come out stronger, with more compelling and innovative products. As a nation we are good with adversity, we will deal with it."
Another concern is that not many of the components that are used to make hi-fi and AV equipment are made in the UK, so they too have to be imported which means, according to Clarity, "they are going to cost more to bring in, so the unit cost of an amplifier, speaker or streamer is likely to go up”. Not good news for shoppers.
Longer term there’s the issue of tariffs: “When the Government negotiates future trade agreements, we will have to see what this does, if anything, to tariffs on imported goods - and, of course, what tariffs are imposed on UK exports by other countries.”
On the plus side, a lower pound could give a boost to exports of audio products made in the UK, which could help offset slowing sales at home. “Given that the UK is still a big producer of quality audio, with so many respected brands that are much sought after the world over, we do have a strong export business,” says Clarity.
Then there’s the question of warranties and CE marking. For example, will it be possible to mark a product ‘Made in the UK’ if it was previously marked as ‘Made in the EU’ because some of its components are sourced from Europe?
It’s too early at this stage to know how the UK’s legal framework will change once we leave the EU, and it could take years for new trade agreements to be put in place. For now, we will have to wait and see.