Enders Analysis has downgraded its forecasts for the audiovisual sector following the referendum result that will likely see the United Kingdom exit the European Union. The analysts said the result offered “no clear benefits to the audiovisual sector” while a climate of uncertainty promised to be harmful across the entire creative sector, with the prospect of a recession now raised.
The Enders report, entitled “Brexit dismal media outlook”, suggested that the the period of uncertainty could last “a good five years”. But added that if there were a recession, it would be “significantly less severe than in 2008/9”. Enders stated: “Just how bad the damage proves to be will depend greatly on the precise agreements reached in negotiations between the UK and the EU, where many details still remain to be clarified.”
Enders said the creative economy would likely to be hit by a downturn in advertising spend, as well as a decline in consumer confidence. It noted: “Borrowing and wealth effects sustained the UK consumer in the subsequent recovery, while the pace of real wage growth was flat and we expect this state of affairs to continue as businesses will be loath to hire and invest. On the other hand, it will not help consumption or encourage consumer confidence, which we expect to deteriorate in the prevailing climate of uncertainty, which could in turn lead to downsizing of spend and growth in savings.”
It described the UK’s admission to the European Economic Area as “very much a last chance saloon”, and warned of the complications of unpicking the UK from the European regulatory framework. “Whilst Brexit campaigner Boris Johnson may have claimed that the Brexit win is a triumph of democracy and cause of great optimism, by allowing the UK to set its own rules just as it chooses, the reality is far more complicated. In general, it will all take a very long time as many EU Directives are imbedded in UK law.”
The report chimes with those in the UK publishing business who spoke to The Bookseller last week in the wake of the result. Pan Macmillan m.d. Anthony Forbes Watson warned on the impact of the economy: “The most important issue is confidence. Confidence is what makes consumers spend, and uncertainty makes consumers stop spending and makes businesses invest less. That’s what we’re facing now.”
Meanwhile Publishers Association (PA), c.e.o. Stephen Lotinga said the process of re-thinking the UK’s regulatory environment had already begun. He said there had been “a clear steer [that] the government wants to hear about regulations in the past—taxation issues such as VAT—where we might want to see changes.” He noted: “They are asking for views. I am anticipating a future of greater flexibility and it’s sensible for us to take advantage of that.”
* The Bookseller is to hold a Brexit Breakfast in association with Harbottle & Lewis next Monday (11th) from 9am. Panellists include Neil Morrison, group human resource director at Penguin Random House; Susie Winter, director of policy and communications at the PA; Shireen Peermohamed partner at Harbottle & Lewis; and Lizzy Kremer agent at David Higham Associates and vice-president of the Association of Authors' Agents.
The discussion, to be chaired by Benedicte Page, deputy editor of The Bookseller, will look at the wide-ranging implications of an exit from the European Union for the publishing sector, including the impact on employment and recruitment; publishing contracts; investment; and rights trading.
The breakfast is free to attend for subscribers of The Bookseller - to register your interest visit https://www.eventbrite.co.uk/e/the-bookseller-brexit-breakfast-tickets-26405862646