- Mayor warns 6,000 jobs in London’s creative industries could be under threat from a no-deal hard Brexit
- Economic impact of worst-case no-deal hard Brexit on the capital’s creative sector could reach £1bn by 2030
- UK’s creative sector stands to lose up to £3.3bn and 27,000 jobs as a result of a no-deal Brexit
London’s reputation as a global capital for the creative industries could be under threat due to the prospect of a no-deal hard Brexit, Mayor of London, Sadiq Khan warned today. Analysis shows that investment, jobs and the ability to retain a talented workforce will all be at stake in the EU withdrawal negotiations.
According to expert independent research by Cambridge Econometrics, commissioned by the Mayor, the capital stands to lose up to £1bn of growth and have 6,000 fewer jobs by 2030 in its world-renowned creative sector than would otherwise have been the case. The effect of the UK leaving the EU with no deal and no transitional deal will be felt across the whole of the UK creative sector. In total, creative industries across the country stand to lose up to £3.3bn and 27,000 jobs as a result of a no-deal hard Brexit.
On top of the potential economic and human impact of a hard Brexit, the Mayor also warned that the capital could struggle to retain a talented workforce. Nine per cent of employees in the arts, entertainment and recreation sectors (18,000 jobs) were born in the EEA1. Analysis shows that a hard Brexit could limit the potential for London to continue to attract a high-calibre workforce, on which its reputation as a global capital of culture is built.
Many of London’s top creative institutions from English National Ballet (Tamara Rojo) to the Design Museum (Alice Black) and British Museum (Hartwig Fischer) are headed by individuals who were born in the EEA. Others, such as Greek fashion designer Mary Katrantzou – have made London their home after graduating at Central Saint Martins – a world-leading centre for art and design education.
The EU is a key trading partner for the UK’s creative industries, with 42 per cent of creative service exports going to the EU. Trade to the EU could be adversely impacted if the UK fails to negotiate a deal that allows full access to the Single Market.
The findings are part of economic analysis of the potential impact of five Brexit scenarios, on nine key sectors of the economy which the Mayor commissioned last year.
The analysis revealed that, if the UK leaves the Single Market and Customs Union in March 2019, with no transitional deal in place – London’s overall economic output (Gross Value Added) would be 2.1 per cent lower by 2030 – the equivalent of £10.9bn. The availability of jobs in the capital would fall by 87,000 or 1.6 per cent.
The report also points out that London’s creative institutions stand to lose out on millions of pounds of EU funding. The UK currently benefits from the Digital Single Market and EU funds such as the Creative Europe fund and the Regional Development Fund. During its first two years, Creative Europe has supported 230 UK cultural and creative organisations as well as the cinema distribution of 84 UK films in other European countries with grants totalling €40 million.
Culture and the creative industries are worth £42 billion per year to London's economy, the creative economy accounts for one in six jobs and are the reason why four out of five tourists choose to visit the capital.
Deputy Mayor for Culture and Creative Industries, Justine Simons OBE, said: “The thing that gives London its creative edge are the people who power the industry - talented, dynamic individuals who have chosen to make London their home and contribute to the life and soul of the city.
“The Government must do everything it can to ensure the capital remains an attractive place for creatives to put down roots. This means ensuring the capital doesn’t lose talent to other European cities, and safeguarding our deep and longstanding trade relations with the EU. It is clear that a no-deal, hard Brexit, without a transitional deal will place all this under threat.”
William Sargent, Co-founder, Framestore and a member of the Mayor’s Business Advisory Board, said: “This analysis shows the extent of devastation to some of the most valuable jobs in the country and the damage the current muddle of the government’s approach is making even worse - as businesses we need clarity and leadership as this crisis emerges.”
Ben Gardiner, Director, Cambridge Econometrics, said: “This is the first time that the various impacts of Brexit - trade, investment and migration - have been comprehensively assessed across a number of key indicators and sectors at sub-national level. Our analysis is particularly valuable to local leaders because it indicates the potential impact on employment and output of Brexit under a range of scenarios, which is necessary given the uncertainty surrounding the final outcome of negotiations. Rigorous analysis and robust evidence such as this could also be usefully applied to other parts of the UK helping political and business leaders plan for the future.”
Both the Mayor and Cambridge Econometrics are clear that this analysis is not a forecast or a prediction of what will happen. There are a large number of factors that could impact on these scenarios, not least the details of any final deal with the EU or trade deals struck with any countries. The analysis does however highlight the scale of the comparative risks associated with each scenario and potential outcome from the negotiations.
To access the report by Cambridge Econometrics, visit www.london.gov.uk/brexit-analysis
ENDS
Notes to editors
Cambridge Econometrics were appointed following a competitive tender exercise, which helped to secure value for money for the type of specialist skills and work this project required.
In total, five scenarios were modelled by Cambridge Econometrics to illustrate the range of possible outcomes of the UK’s future relationship with the EU. These are:
- Scenario 1 - A ‘close to status quo’ scenario where the UK remains part of both of the single market and customs union
- Scenario 2 - A scenario where the UK remains part of the single market, but not the customs union.
- Scenario 3 - A scenario where the UK remains part of the customs union, but not the single market.
- Scenario 4 - A hard Brexit scenario in which trade between the UK and the EU falls under World Trade Organisation (WTO) rules with a two-year transition period from March 2019; and
- Scenario 5 - The same hard Brexit scenario but without a two-year transition period.
Table 1: Impact of Brexit on London’s key sectors in terms of gross value added by 2030 in comparison with the UK remaining in the Single Market and Customs Union (scenario 1).
Table 2: Impact of Brexit on London’s key sectors in terms of employment by 2030 in comparison with the UK remaining in the Single Market and Customs Union (scenario 1).
Table 3: Impact of Brexit on the UK’s key sectors in terms of gross value added by 2030 in comparison with the UK remaining in the Single Market and Customs Union (scenario 1).
Table 4: Impact of Brexit on the UK’s key sectors in terms of employment by 2030 in comparison with the UK remaining in the Single Market and Customs Union (scenario 1).