After being hit by the COVID health crisis that led to closures and layoffs, the British cultural sector faced a new obstacle: Brexit. On January 1, 2021, the United Kingdom officially left the European Union, forcing the art market and its actors to find solutions. Artsper deciphers for you the direct and indirect consequences of this major upheaval.
Contrasting commercial effects
Some effects were immediate, such as the drop in the value of exports from over 700 million pounds in December 2020 to 215 million pounds in March 2021. However, these figures quickly recovered to a more normal level in June, at nearly 500 million pounds (OEC). The British have indeed adapted quickly, helped by the one-year transition period in 2020 that allowed them to prepare.
The UK has remained a major player in the international art world. According to OEC figures for June 2021, the value of its art and antiques exports is 3 times that of those imports, despite Brexit. The country exports mainly to the US (£133M) and Switzerland (£86.2M). Most UK imports come from these same countries, and other non-European countries like China or Mexico.
Despite Brexit, the UK continues to export a large number of works and antiques to the European Union, particularly to Germany (£65.3M), France (£53M) and Italy (£32.6M). It is on these exports, whose value has been assessed more accurately since the implementation of these new regulations, as well as on the various cultural exchanges with the EU that Brexit has had the greatest impact.
Monthly value of works of art, collectors' pieces, and antiques exported from the United Kingdom (UK) from January 2020 to April 2021, by EU and non-EU trade
Sources : Statista, HM Revenue and Customs
The end of the free movement of goods
The most important consequence for the cultural sector is the end of the free movement of goods. This could lead to difficulties in transporting artworks from the UK to the EU and vice versa. The cultural sector has been hit with the return of import taxes and bureaucracy that requires them to fill out extensive paperwork and forms. Although a majority of the cultural sector is built for international deliveries, this increases the delivery time for European customers.
In an attempt to reduce bureaucracy, the UK has chosen to change the value threshold at which a piece requires an export license from £132,000 to £180,000 for paintings, for instance.
The end of free movement also means additional costs for receiving artworks. Indeed, the pieces are subject to taxes and checks by customs officers. The authorities are not always concerned with the preservation of artworks, and sometimes, particularly bulky crates are opened for checks, which can damage a piece. Logistics companies, as well as galleries and artists, must therefore find solutions to alleviate this problem and ensure that shipments are made quickly and safely.
Article by The Guardian on post-Brexit delivery issues
The end of the free movement of people
If goods can no longer move freely, it is also the same for people, which causes several problems.
First, it has become much more complicated to hire staff from the European Union in British cultural institutions, and vice versa. Administrative procedures have become longer, and there is no guarantee that visa requests will be approved. While the pandemic has led to a number of layoffs, the cultural sector is hiring again as reopenings become clearer, but it is much more difficult for them to do so when they need experts and qualified staff from the EU.
This is also an additional barrier for artists and galleries. It is no longer as easy as it was to go to artists residencies, to exchange with other artists, to participate in fairs or even just to travel to find inspiration or to learn new things.
The loss of some advantages
The UK is also losing the advantages it had over the rest of the EU. Indeed, it was previously the country of choice for importing works from abroad before redistributing them in Europe, because British taxes were lower than in other countries. VAT was 5%, compared to an average of 8% for the rest of the European Union. It is now easier to import into France, where the VAT is 5.5%, rather than paying import fees twice!
Comparison of the VAT rates between France and the UK. Image source: wise.com
When shipping before, location of the supplier was paramount, but with the UK's withdrawal from the EU, it is the location of the (European) consumer that takes precedence. This has an impact in particular on online trade between the UK and the EU.
A relative impact
At the beginning of the year, some were already saying that Paris would quickly replace London as the European capital of art. However, the reality seems quite different. Thierry Ehrmann, president and founder of Artmarket.com, said in conversation with Artprice:
"Paris is not really attracting masterpieces from abroad more than before, as London did for many years, and, as it continues to do. Despite Brexit, the English capital is still attracting major works that could have been sold in France: for example, on 23 March 2021, Christie’s sold, three key works from the Paris collection of Claude Hersaint (signed Miro, Magritte and Ernst) in London for a total of $31 million."
The United Kingdom thus remains a major player in the art world and the 3rd in the world after China and the United States. Despite Brexit, it is unlikely that this position will be stolen from it in the years to come.
This type of art has one major advantage: no need to travel and no need for delivery. Everything is done online, which simplifies the administrative procedures and allows the UK to be as much in the running as other countries.
New potential benefits
The British government has tried to adapt to the situation by putting in place new laws to help the cultural sector. For example, it has decided not to apply the same strict regulations that the European Union imposes on the import of cultural heritage goods. These regulations are used to fight against antiquities trafficking by forcing importers to obtain a license to prove that they are exporting these goods legally from their country of origin.
The damage of artefacts due to illicit trade at Palmyra, Syria. Source: Wikimedia Commons
With these laws, the European authorities have obtained the right to confiscate cultural goods if the papers are not in order. This regulation restricts the trade of these objects and gives a competitive advantage to other countries such as the United States in the antiquities trade. By not complying with these regulations, the UK maintains its dominant position.
The UK also has the option of lowering the VAT on imports. As explained above, it currently stands at 5%. In order to become an even more important player in the global art market than it already is, the country could lower this import tax as close as possible to that of the United States (0%) or China (3%). The United Kingdom could thus become a real competitor to these countries, which are the current market leaders.
In conclusion, it is still difficult to assess the real impact that Brexit will have as it will only be measurable in a few years. Beyond its withdrawal from the EU, the British market is also following the art market trends, whether they are global or local. For example, the 2021 mid-year review by Art Basel and UBS noted that art collectors remained very optimistic about the art market, and 83% of collectors in the UK shared this sentiment. But while in the most optimistic countries, 60% of wealthy art collectors planned to buy new works and thus expand their collection, this number dropped to only 43% in the UK, an exception in the art market landscape.