As an MP, Tom Brake (LibDems) has been on the frontline of fighting Brexit because of the damage it would inflict on UK jobs, communities and prosperity. The big debates on lost manufacturing and finance sector jobs have hidden the equally damaging impact on UK media, tech and creative services firms. In this exclusive interview for Netimperative, he talks candidly – and the news isn’t good.
Our ad agencies and tech platforms are used by companies across Europe, so Brexit is a material threat to London’s role as the digital creative hub of the EU
1. What does a hard or no-deal Brexit mean for the digital economy?
The Government have already decided that the UK will not to be part of the EU’s Digital Single Market, with or without a Brexit deal.
This will make it tougher for the UK creative and tech sector to work for European clients and across borders, which is a massive deal, based on the key role the UK has grown to play. Our ad agencies and tech platforms are used by companies across Europe, so Brexit is a material threat to London’s role as the digital creative hub of the EU.
With No Deal or a poor deal, for any European clients, it will instantly become more expensive and more bureaucratic to use a UK firm rather than one based in Germany or France. The big agency networks may be forced to relocate many of their accounts to be legally serviced and managed from continental Europe, and this will hit our ad agencies, media agencies, digital start-ups, technology providers and the type of high energy creative companies the UK has been working so hard to nurture.
Expect a fast talent and brain drain to Berlin, Paris, Barcelona, Milan…
2. What does a hard or no-deal Brexit mean for talent?
I’d expect a fast talent and brain drain to Berlin, Paris, Barcelona, Milan and the other tech hubs that have tried to compete with the UK. These cities are already working on attracting UK-based talent. Some of that talent drain would be Brits trying to get inter-company placements in the cities where the work will move to; some of it would be European nationals moving; and some of it would the higher tier visa holders from the US and other markets who moved into the UK, because this is where the clients used to come for the best creative and media talent, relocating.
3. How would leaving the newly-formed digital single market (DSM) affect UK firms?
Although it is hard to predict exactly what the impact of staying out of the DSM will be, it is likely to affect jobs, investment, the location of digital assets in the UK etc.
UK firms will also be affected if the Chequers proposals survive, as services are not covered by Chequers, meaning that unless a deal covering services is also secured, UK suppliers of services in the EU may have to satisfy two regulatory regimes, damaging their competitiveness.
Sadly the country would be a lot worse off, permanently
4. How will consumer spending habits change after leaving the single market and customs union? How should marketing campaigns adapt?
Sadly the country would be a lot worse off, permanently. This is according to the Government’s own leaked analysis. The migration of jobs and companies will mean employment in certain sectors will fall, a further drop in the value of the £ will drive up inflation and with that consumer spending will be reined in. The tax take in the treasury will fall, which gives future governments fewer ways to intervene to inject energy into the economy. Based on when that’s happened in the past, the advertising and marketing industry contracts disproportionately in recessions as marketing spend tends to be the most volatile in companies. It would be bad news for the media sector long term as well, because this is a permanent step down.
Any Brexit will hurt, and a “no-deal” will cripple many firms
5. Last month, Bank of England Governor Mark Carney said “Britain’s economy is still acting like there will be a Brexit deal” and it’s a major factor that’s keeping the economy relatively steady. How seriously should businesses be preparing for no-deal if it turns out to be a waste of time?
I’m sensing a similar optimism and naivety to just before the referendum, with many people saying “it simply won’t happen”. Industry needs to wake-up, fast. Any Brexit will hurt, and a “no-deal” will cripple many firms. We’ve never had a situation like this in the UK, which is why many people are finding it hard to process. Think about the car component companies that rely on frictionless trade for the pan-European supply chains: those contracts will stop. And there’s nothing to replace them. Businesses should check out the technical notes the Government are producing to get a feel for how they might be affected by No Deal.
6. Breaking the law aside, it’s widely accepted that ‘Vote Leave’ ran a far more successful online campaign with a strong, simple and emotive message that cut through to the electorate. If there was a People’s Vote, how should a Remain campaign do things differently online?
People now know the promises made to them of a quick, painless Brexit that leaves the UK better off, aren’t going to be delivered. So the Remain campaign should start from a position of greater credibility. The Remain campaign will need emotive messages about why the EU matters and what a future in a reformed EU would offer the UK. We will not allow the Brexit elite to portray themselves as the defenders of the people. With their Hedge Fund supporters, interests in emerging markets and gold, they do not represent the people of Boston or Blackpool who voted to leave. Indeed if Brexit happens it will be the people in areas like Boston and Blackpool who will be hit hardest.
We had analogue regulators, in a digital age. They were unable to see what was happening, get any transparency, and had rings run around them.
7. Digital politics is still a wild west frontier. Will fines for dark ads on the web simply be ‘priced in’ to future campaigns, costed as a price worth paying for victory? What more changes do you think we need?
We had analogue regulators, in a digital age. They were unable to see what was happening, get any transparency, and had rings run around them. And that’s before the illegal overspending, and the involvement of a foreign government deliberately trying to wreck the EU because it does such a good job of standing up to them. They will need greater powers, resources, the ability to impose higher fines and pull down fake claims and those paying for on-line ads will need to be identified as such in their ads. This should help make the campaign cleaner than last time.