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Abu Dhabi, UAEWednesday 20 February 2019

What's to come of the UK arts scene in a no-deal Brexit scenario

The UK drives much of the art market action for the EU, according to Arts Council England, which issued a guide to coping with a no-deal Brexit

LONDON, ENGLAND - FEBRUARY 22: Pablo Picasso's Femme au beret et a la robe quadrillee goes on view during the press call before an auction dedicated to Impressionist artworks at Sotheby's on February 22, 2018 in London, England. (Photo by Ian Gavan/Getty Images)
LONDON, ENGLAND - FEBRUARY 22: Pablo Picasso's Femme au beret et a la robe quadrillee goes on view during the press call before an auction dedicated to Impressionist artworks at Sotheby's on February 22, 2018 in London, England. (Photo by Ian Gavan/Getty Images)

While businesses, investors, home-owners and workers in Britain increasingly fret about just what the country will look like after the dust settles from the UK's divorce from the EU, one sector often overlooked is equally worried about the outcome.

On January 22, Arts Council England, a non-departmental body of the UK’s Department of Culture, published a guide to coping with a "no-deal" Brexit - where the country leaves the EU on March 29 with no agreements in place regarding cross-border trade for artists, auction houses and other creatives.

As with the rest of British commerce, such a scenario is cause for concern in the UK art market and wider economy. The UK arts and culture industry is a significant player; the Centre for Economics and Business Research estimates that the sector contributes £7.7 billion (Dh36.98bn) annually to the UK economy.

The Arts Council England EU Exit Guide gives advice to individuals, businesses and institutions involved in the UK’s culture sector and outlines changes that will affect the British art market in the event of both a deal and no-deal.

It is not just those inside the country who perhaps should be concerned. In addition to benefiting the UK economy, the British art industry makes up the foundation of the EU’s overall economic growth in this area.

“While sales within the EU have grown by 22 per cent since 2009, much of this has been driven by the UK," says The Art Market 2018 report by Arts Economics, a research and consulting firm, and UBS. "Measured without the UK, EU sales have declined by 2 per cent over this period.”

However, the largest art markets globally, alongside the UK, remain outside the EU. “The three largest markets of the US, China and the UK accounted for 83 per cent of total global sales by value ... The US was the largest market worldwide, accounting for 42 per cent of sales by value, with China in second place (21 per cent) and the UK the third-largest market with 20 per cent,” according to the report.

Proponents of a hard or no-deal Brexit might argue that the rest of the EU would suffer more than the UK, which would be free to strike up deals with markets in the US and China. However, a 2017 survey issued by ICM Unlimited, of 992 artists and arts organisations found “most stakeholders ... have a negative perception of Brexit,” and “when asked about potential advantages, a majority stated that they were not able to give any arising for their organisation as a result of Brexit”.

While sales within the EU have grown by 22 per cent since 2009, much of this has been driven by the UK.

The Art Market report 2018

Aside from the major auction houses such as Sotheby's and Christie's, which have operations globally, for many artists in the UK the divorce is a major concern. “I do sell paintings to the EU and internationally and I do believe that Brexit is going to hurt all producers, artists included, especially if we leave the EU without a deal as this will more than certainly raise export costs," Micheal Tierney, a British painter who produced posters for the Remain campaign, tells The National.

The big players are far more insulated, as Manick Govinda, a British Arts Consultant and member of Brexit Creatives, a network of pro-Leave artists and others, points out: “I don’t think there has been much change since the results of the EU Referendum on 24 June 2016 until now. The market is strong in the US, Hong Kong and London," he tells The National.

"Sotheby’s breakdown for 2018 reveals that $1.3bn revenue came from London sales and only about $500,000 from sales across the whole of Continental Europe. Sales were up in 2018.”

Whatever happens regarding a deal or no-deal, post-Brexit, Mr Govinda says the UK government should "interfere as little as possible and uphold its successful Anglo-American market model of minimal state regulation".

"It should lower the level of import VAT from 5 per cent to less than 3 per cent [the current import VAT rate in China] to remain competitive.”

Of course, paintings and sculptures if sold abroad or imported to the UK need to be physically transported, and there looms another potential problem. On the movement of goods and customs, the Arts Council states that: “In a ‘no deal’ scenario the government’s planning assumptions indicate there will be reduced access across the straits at Dover and Folkestone for up to six months. This could affect organisations and individuals working in the creative industries.” Dover and Folkstone are the UK's main ferry ports linking the country to mainland Europe. Dover Cargo Terminal handles 300,000 tonnes annually at present with around 9,000 container movements per year, according to the port.

Artists may face difficulties in facilitating transactions with buyers abroad in a no-deal situation. “The EU has an established mechanism to allow the free flow of personal data to countries outside the EU, namely an adequacy decision," the council says.

"It is highly unlikely the European Commission will have made adequacy decisions regarding the UK at the point of exit in March 2019."

It goes on to suggest that UK and EU organisations and citizens can take steps to mitigate the impact of this by implementing "alternative transfer mechanisms to send personal data from the EU to the UK”.

An outline of artistic copyright in the context of a no-deal Brexit was also given: “The government published a notice regarding the exhaustion of intellectual property rights if there is a no Brexit deal.

"If no deal is agreed, organisations may need the IP right holder’s consent to export intellectual property-protected goods that have been legitimately put on the market in the UK to the EU,” the Arts Council report says. Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Post-Brexit, the EU may not recognise UK IP rights as European Commission certification might not be automatically applied in Britain.

According to a UK government briefing paper released last month, intellectual property combined with personal and cultural exports make up 6.3 per cent of total UK exports to the trading bloc. Without a customs agreement, there will likely be an extra regulatory step for auction houses and organisations in the UK wanting to share or sell original works easily in the EU. This could result in a refocusing towards other markets or a reduction in the exports of intellectual property altogether.

If the UK crashes out of the EU without a deal to enable the maintenance of smooth trade and financial flows between the two, Mr Tierney is not optimistic. "It is definitely going to make the smaller artist suffer most as this will mean I will either have to raise the prices of my work, which could put off a potential collector, or I will have to foot the extra costs myself, meaning less of a profit.

"Personally. I'm still hoping for a miracle and we remain in the EU or have as close a relationship as possible.”

Given the present disarray over Brexit in the British parliament, which only seems to be worsening as the deadline looms, neither looks likely.

Updated: February 7, 2019 12:04 PM

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