Delivering a Brexit deal that works for UK advertising
A view from Stephen Woodford

Delivering a Brexit deal that works for UK advertising

As the UK's departure from the EU moves ever closer, the Advertising Association's Stephen Woodford looks at what UK advertising needs to see from Brexit negotiations so that it remains a leading creative force.

Advertising is a vital component of the UK economy, with adspend of more than £22bn in 2017 generating more than £132bn in value for GB plc. Not only that, but we are a giant in the global ad industry. More than a third of the top 20 UK ad agencies’ revenue comes from overseas business – that’s almost £300m – and growth in adverising exports is larger than that of the wider economy, with annual UK exports of advertising services worth £5.8bn, according to the latest figures.

In an economy where so many sectors run a trade deficit, advertising is the opposite. The UK exports more advertising services than it imports to the tune of £2.9bn – this is the largest trade surplus in ad services in Europe. And our creativity is unmatched across the continent; since 2005, the UK has won more Cannes Lions than any other European country – more than 1,500!

But all these impressive stats predate Brexit. When the UK leaves the European Union on 29 March 2019, we will enter unknown territory, and it remains to be seen what the data will show in the future. But what we do know is that securing the right deal for the UK and our ad industry is crucial if we are to remain the global creative powerhouse we are today.

The original assumption was that a deal would be agreed at the EU Council meeting in October to give European parliaments sufficient time to ratify it. We are still waiting on tenterhooks on whether an agreement can be made by November or December at the very latest. The mood music seems to have changed since Salzburg and there appears to be a determination from both sides to get a deal done. Perhaps there is some creative solution to solve the conundrum of the Irish border and what the fabled "backstop" looks like, where it extends to and for how long it might last. But, for the moment, the issue appears to be insurmountable and time is short. So the risk of a "no deal" has not subsided.

What do we want?

Our position is that there are two essentials the government must negotiate as a bottom line for the advertising industry: adequacy-plus on data to guarantee continued cross-border data flows and equivalence of broadcasting rules (replacing the current framework of access to the European market by country of origin).

Another key area of concern for us and our members is our people who work in the industry. Many have come here from overseas and have added immeasurably to the richness and creativity of UK advertising. We are grateful that EU citizens resident in the UK on 29 March 2019 will be protected and that those who have already had five years’ continuous residence in the UK will be eligible to apply for settled status. Others will be able to remain in the UK to build up five years’ continuous residence.

This is a good thing: people deserve stability and reassurance during these uncertain times. But, in the future, we need to ensure that future migration policy keeps the talent pipeline flowing.

The Migration Advisory Committee recently published its report on the impact of European Economic Area migration on the UK economy and society. The evidence in the report suggested that immigration has a positive impact on productivity and innovation. The MAC recommended that a new migration system should not offer EU citizens preferential treatment and should remove the cap on Tier 2 migrants. While some aspects of the report are welcomed, we are concerned that some of the proposals – such as maintaining the Tier 2 salary threshold – may restrict opportunities for many young people to build their careers in the UK.

Our Advertising Pays 6 report into talent working in the UK ad industry showed that 37% of foreign arrivals into London’s ad industry are from the EU. These people are adding to the UK economy and strengthening the power of the British creative industries. They are a great advertisement for Britain and a great advertisement for British advertising. They deserve security. We owe them nothing less and we will need them more than ever.

The future economic partnership

The Brexit white paper, or "Chequers deal", published in July, set out the government’s intentions for the UK’s future economic partnership with the EU in a number of areas relevant to the ad industry, including services, where the UK is seeking "regulatory flexibility" for services while accepting the level of access will be less than it is now.

However, on broadcasting, the government has said that it will seek the best possible deal for the sector, without further elaboration. The UK has conceded that the country of origin principle will no longer apply and this potentially will have a major impact on commercial broadcasters with headquarters in the UK that are set up to broadcast to the rest of the EU. On data, UK compliance with GDPR is seen as an advantage and an excellent starting point for discussions. And the UK is keen to include a comprehensive agreement on data protection and facilitate data flows. Nevertheless, given the divisions in cabinet and parliament, the passage of the Chequers deal will not be easy.

What are we doing to prepare?

So, bearing all this in mind, what are we doing as the voice of UK advertising to prepare for a "no-deal" scenario? The Advertising Association has set up a working group to look at planning in the event of a failure to reach a deal and its first area of focus has been data. We are also working with officials directly and through our industry peers as part of the Professional Business Services Council. AA members are also engaging with EU equivalents to speak up about the potential business disruption if there is no deal.

Whatever the coming months bring, the AA will remain our industry’s strong voice to government and will continue to advocate the best deal possible to ensure the UK remains the world’s advertising hub. We urge you to join us in our goal.

Stephen Woodford is chief executive of the Advertising Association