22 Jun Brexit: There Is Too Much To Lose (Comment Piece)
Leaving the EU would mean job losses, restricted access to talent and a tougher export market, argues David Johnson (CEO – Compact Media).
As the EU debate heats up, the stakes rise by the day. Given that the creative industries now account for well over 5% of GDP, the impact is important for everyone in the sector.
Whichever the outcome is chosen tomorrow night, continued uncertainty and lack of confidence in the economy will be the most damaging impact. We have already had a brief, and arguably unnecessary, taste of uncertainty just by holding two major constitutional referenda within a year.
A Brexit vote, and the resulting several years it would take to re-stabilise, would be damaging to the whole economy – and as we all know, the creative industries tend to feel the pain early in any cycle. Having studied some of the likely implications of a potential exit, it is hard to spot benefits that would make this pain worthwhile.
The UK enjoys a valuable position as a bridgehead into Europe. If the UK leaves the EU, the loss of tax advantages and harmonisation, and free access to the market, may result in companies moving to another member state – resulting in job losses and falling revenues.
For example, what will happen to the channels that are currently headquartered in the UK and licensed by Ofcom? Under European legislation, a channel licensed in one member state does not need further regulation by other member states if it wants to broadcast, which provides a valuable incentive to base a creative business in London.
Content quotas under EU legislation also give the UK another valuable advantage. All channels broadcasting in the EU need a minimum amount of content made by European producers. Proposed amendments to the legislation would require online providers such as Netflix and Amazon to comply. UK produced works would no longer qualify as European, which could make our content less attractive and less likely to travel.
EU Media Funds and ERDF funding have provided support for a number of productions and led to significant inward investment for the UK regions, a particular success being Game of Thrones (pictured), much of which is filmed in Northern Ireland, transforming the TV production industry there.
Loss of access to these funds would mean that either the UK would become less attractive, or require new funding mechanisms to plug the gap. But would the UK government have a more flexible approach to direct investment and support for the sector to help it remain competitive? There is uncertainty around what additional co-production treaties the government would need to negotiate and renegotiate.
The Commission is driving an aggressive approach towards creating a digital single market and consistent treatment of copyright in Europe. Access to EU markets may well be harder if the UK has different standards.
UK talent and producers could face tougher restrictions on their travel across the EU; visa restrictions would make our talent pool less attractive to international producers shooting in Europe. Likewise, it would be harder to attract the best European entertainment and sporting talent to work in the UK.
There will be significant financial implications to be worked through, including tax (withholding taxes, harmonisation of VAT) and the as yet unquantifiable impact on revenues currently collected from other member states.
Free access to EU collections societies have been a valuable source of revenues. In the future, if certain revenue streams for UK producers such as cable retransmission royalties and private copy diminish, or are not extended to the UK, producers would have a strong case for asking the UK government to introduce compensation for any loss of revenues.
One final key point: exit will not mean an end to compliance. A requirement for trade treaties is likely to be UK compatibility with EU legislation, particularly copyright, employment and competition law. Being out of the EU would give the UK no say in legislation that producers would still have to follow.
The vision ofa a post-Brexit UK has not been addressed for the creative industries. There is too great a risk and too much to lose to make the pain worthwhile.
originally printed as a Broadcast Comment Piece (22nd June 2016)