Retailers including Next, Marks & Spencer and Tesco could have their clothing supply from Sri Lanka hit as the EU looks set to withdraw funding from the country.

Clothes have been imported tax-free to the UK from Sri Lanka over the past four years in a scheme set up to aid the country’s recovery after the tsunami in December 2004.

However, the benefits could soon be withdrawn as punishment for the Sri Lankan Government’s alleged human rights abuses during the recent civil war, according to the Times.

The move could increase the cost of the clothing by up to 10%, forcing retailers to source elsewhere.

Next has a factory in Sri Lanka that produces jersey pieces, Tesco reportedly produces parts of its Cherokee range in the country and Marks & Spencer manufactures parts of its lingerie and school uniform ranges there.

Conditions for workers at the factories are reported to be very good and the move could threaten the livelihoods of 250,000 workers employed in hundreds of factories across the country.

The EU has reportedly given the Sri Lankan Government until tomorrow to respond to a human rights report alleging war crimes.

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