Falling markets and the effect/affect to the kilt.

[Nanook]

While kilts may be cheaper for those outside the UK, the cost hasn't dropped within the UK-- the pound is still a pound.

The dollar is high not due to confidence is the U.S. economy or fiscal stability but due to demand for dollars to feed losses on margin positions. Current strategy to tackle the crisis will lead to an intended significant depreciation of the U.S. dollar against all major currencies. Political pressures, however, too in the EUROzone should act to try to downwardly realign the EURO as well but probably with a higher level of stability and at a level higher against the U.S. Dollar than we are currently seeing. Most analysts think that the dollars current strength is a "last gasp" before its renewed fall. What is clear among all the uncertainty is that heavy deficit spending--- a lot of it unproductive but politically unavoidable (Citicorp, GM etc.)--- and inflation are on the agenda.

What may happen is a shrinking of the domestic (ie: UK) kilt market with the result that cheap kilts will be hit the hardest,

I don't agree. During economic downturns fashion markets move in both conservative and price sensitive circles. Highland dress tends to be perceived by the market as neither conservative nor inexpensive but as a fashion luxury. The 1930s, for example, saw a shift to practical day clothing. Men's clothing turned to more simple less tailored cuts with wide shoulders. The brightly patterned knitwear that was so popular in the 1920s fell out of favour to more subtle colours such as drab browns, grays and light blues. Trousers got cuffs and gray flannel became extremely popular.

Highland Dress, on the other hand, is a bit dandyish.

Contrary to what a lot of thoughtless people seem to believe, dandyism is not even an excessive delight in clothes and material elegance. For the perfect dandy, these things are no more than the symbol of the aristocratic superiority of his mind. Thus, in his eyes, enamored as he is above all of distinction, perfection in dress consists in absolute simplicity, which is, indeed, the best way of being distinguished. What then can this passion be, which has crystallized into a doctrine, and has formed a number of outstanding devotees, this unwritten code that has molded so proud a brotherhood? It is, above all, the burning desire to create a personal form of originality, within the external limits of social conventions. It is a kind of cult of the ego which can still survive the pursuit of that form of happiness to be found in others, in woman for example; which can even survive what are called illusions. It is the pleasure of causing surprise in others, and the proud satisfaction of never showing any oneself. A dandy may be blasé, he may even suffer pain, but in the latter case he will keep smiling, like the Spartan under the bite of the fox.
....
Fastidious, unbelievables, beaux, lions or dandies: whichever label these men claim for themselves, one and all stem from the same origin, all share the same characteristic of opposition and revolt; all are representatives of what is best in human pride, of that need, which is too rare in the modern generation, to combat and destroy triviality.

Dandyism to quote Baudelaire again "appears especially in those periods of transition when democracy has not yet become all-powerful, and when aristocracy is only partially weakened and discredited".

while the established quality makers will suffer the least.

Many have already been beheaded and most are aging. Downturns in the economy have tended to be poison to the Scottish textile industry.

Kilts were cheaper ten years ago than they are today,

Not really. There are a lot of cut price tartans from closed mills, closed factories, obsoleted army stores, cheaper more automated production and Asian knock-offs flowing into cheaper kilts. Most kilts today have some bits done on machines and many of the "kilt companies" on the high street have adopted much more rational (assembly line) techniques. That all said a lot of Highland fashion companies and public subsidized projects have closed their doors since 2000.