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U.K. auction houses had a banner year in 2016, notching a 21.3% increase in sales by value. But jobs in the country’s cultural and creative sectors are under threat, according to a new report, as contentious negotiations continue over the nation’s relationship with the European Union post-Brexit in 2019.
The report, commissioned by London Mayor Sadiq Khan and compiled by Cambridge Econometrics, analyzed how the various potential outcomes of Brexit negotiations might impact the U.K.’s cultural and creative industries, which together generate £42 billion for London’s economy alone each year.
The creative sector would suffer should the U.K. leave the European Union without a transition period and without a deal on trade, in a so-called hard Brexit, the report found. The sector could see a £3.3 billion, or 2.3% reduction, in economic output and 27,000 fewer jobs, a loss of 1.8%, by 2030 compared to if the U.K. reached Brexit deal that maintained a relationship with Europe substantively similar to the status quo.
A hard Brexit could also result in the loss of 8,000 jobs in the U.K. cultural sector (a 1.8% decline) and a £500 million, or 1.4% reduction, in the sector’s economic output than would otherwise be the case, the report found. Cambridge Econometrics director Ben Gardiner said the study marks the first comprehensive examination of various Brexit outcomes’ ultimate effects on these sectors.
“The Mayor of London is taking this seemingly more seriously than the U.K. government in general,” said James Doeser, an independent researcher in the U.K., of the report. He cautioned, however, that it is very difficult to predict the economic impact of something as far-reaching as Brexit.
The report used standard government definitions for the creative and cultural sectors. The cultural sector includes “those industries with a cultural object at the centre of the industry,” including professions like musical instrument manufacturing. The creative sector is more broadly defined and encompasses industries such as advertising, architecture, and publishing. Certain areas, like museums, film, and the performing arts, are counted in both sectors. The government estimates that just under two million people worked in creative industries in 2017.
The blow to these creative industries of a no-deal Brexit, in which trade with the European mainland would be governed by World Trade Organization rules, would be softened by a two-year transitional period, but not by much, the report found: 25,000 jobs would be lost in the creative sector and its economic output would fall 2.1% by 2030.
The creative and cultural sectors are projected to fare better if the U.K. were to remain in the EU’s single market after a two-year transition period. The creative sector would lose 11,000 jobs and the cultural sector 3,000 jobs by 2030. Loss of economic output in that scenario would amount to 0.9% in the creative sector and 0.5% in the cultural sector.
The report notes that any form of Brexit threatens EU funding to cultural organizations in the U.K. provided through organizations such as Creative Europe. Over the past two years, Creative Europe has provided €40 million in grants to 230 U.K. cultural and creative groups and 84 films. The report also found that limitations of migration from Europe that could come following Brexit would hit the arts particularly hard, given that the sector has a geographically diverse talent pool.
London would bear the brunt of many of the job losses. A hard Brexit with no transition would see the capital with 7,000 fewer jobs across the cultural and creative sectors combined by 2030, and a £1 billion (1.7%) decline in the creative sector’s economic output. Cultural sector economic output would decline by 0.3%.
Asked about the report via email, a spokesperson for the Department for Exiting the European Union pointed to recent progress in negotiations. “The fact is we are working to secure the best and most ambitious Brexit deal for the whole of the United Kingdom,” the spokesperson wrote. “December’s European Council showed that, having made sufficient progress, both sides believe we will achieve an ambitious deal securing prosperity for the U.K. and EU27.”
But many in Parliament have have demanded more clarity about the potential economic impact of Brexit on various sectors. A British government report provided to Parliament about the creative sector in December was criticized for its lack of analysis or detail beyond providing basic facts and figures about the sector.
“There are relatively few people who are impacted in an existential way from a no-deal Brexit,” said Doeser, the researcher. But, he cautioned, “there are an enormous number of people working in the creative industries who will be incrementally and increasingly dissuaded from working in the U.K. or continuing to invest in their business here.”