The potential impact of Brexit on the creative industries, tourism and the digital single market Contents

1Introduction

Tourism, creative industries and the digital economy

1.Tourism, the creative industries, and the businesses that make up the digital economy form the backbone of the UK’s economy. Travel and tourism is the fourth largest industry in the UK, its contribution to the economy is “in excess of £130bn”, and the sector employs approximately 3 million people.1 Moreover, the British tourism industry is one of the largest in the world:

In international terms, the UK tourism industry is the sixth largest in the world based on value, contributing £25.4bn per annum to the UK economy in export earnings, and eighth largest based on inbound visitors (36m per annum).2

2.In 2015 the creative industries employed 1.9 million people across the UK and in 2014 the value of their exports was worth £19.8 billion.3 British creative output does not just bring about economic benefits, but shapes international perceptions of the UK and is a central element of ‘soft power’ and wider global influence. Creative skills are not limited to one part of the British economy; one million people with design skills are employed in non–design industries.4 It is telling that CBS Studios International, which is part of the US CBS corporation, said:

The UK has the most successful creative industry in Europe at all levels: creators, producers, directors, distributors and world leading platforms and broadcasters are all based and working here.5

3.In a similar vein, the US-based IT firm, Dell EMC, described the technology and digital sector in the UK as a “success story.”6 The UK has 1.56 million people employed in tech and digital—the highest proportion of any G20 nation.7 The development of the sector outpaces many other parts of the UK economy and has proved attractive to international businesses, as Dell EMC told us:

Last year the sector grew 32% faster than the rest of the economy, boosting GDP by around £145bn a year. Britain is now leading the way in driving business innovation, for example in fintech and blockchain technologies. A thriving digital economy in the UK has created a sound footing for US-based companies like Dell Technologies to build a base for European operations from the UK.8

Our inquiry and report

4.In the Autumn of 2016 our predecessor Committee launched an inquiry examining the impact of Brexit on the creative industries, tourism and the digital single market, and the priority issues to be addressed by the UK government in its negotiations with the European Union. The Committee took evidence across five sessions. It received over 150 submissions of written evidence. This included taking evidence in Belfast to look at the specific challenges faced by the creative industries and tourism businesses in Northern Ireland. The Committee also visited Berlin and Barcelona, as alternative centres for digital and creative businesses in Europe, to consider whether or not there is a significant risk that jobs in these sectors could move away from London as a result of Brexit.

5.In general, the evidence gathered reflected the deep concern held by representatives of all industries and sectors. We found little in the way of optimism as witnesses tried to assess the impact Brexit will have on their access to workers, funding and EU markets. However, it was felt that London’s position as a global centre for the creative industries, and Europe’s most visited city, meant that it was unlikely that any other centre in Europe could challenge it directly, at least in the short term. Other UK cities without London’s critical mass might not be as resilient. However, as with the financial services sector, there is a danger that some jobs could be lost to other European cities. Some, but a minority of, witnesses believed that Brexit may present an opportunity to develop more favourably aspects of the regulatory environment and kick–start a reformed approach to non–EU immigration. For the most part, such potential opportunities were regarded as dependent on the outcome of the negotiations between the UK and EU. Notwithstanding these observations, the overwhelming message was that businesses and organisations across these sectors wanted to maintain the free movement of people, access to funding and markets, and a level regulatory playing field, once the UK has left the EU. They have also asked that the Government maintain the existing tax incentives to support foreign investment in the UK creative industries.

6.The purpose of this report is not to debate the benefits or otherwise of Brexit, but simply to highlight concerns and opportunities that must be addressed within the negotiations, and to identify risks that the Government must mitigate after March 2019. These risks, clearly, involve possible disinvestment, as businesses make contingencies to move parts of their business to bases within the European Union; threats to future investment in a UK outside the EU; and the potential impact, therefore, on employment. With Brexit yet to happen, however, these areas are very sensitive and companies are, understandably, wary of publicising any plans they may have. In this report, therefore, we focus our attention on three core areas where witnesses expressed particularly strong concerns: issues relating to the workforce, the potential loss of direct EU funding and the future regulatory environment.


1 IOB 023 para 1.2

2 IOB 037 p 1

3 IOB 122 paras 1, 10

4 IOB 077 para 7

5 IOB 127 p 2

6 IOB 129 p 1

7 IOB 036 para 20, IOB 129 p 1

8 IOB 129, p 1




24 January 2018