The Paradox of Brexit

The Brexit saga continues. Without a deal in sight after 2 years of negotiations, the UK’s departure from the EU continues to be delayed, this time until October 31st. While the results of the 2016 referendum caught the world by surprise, the inability of parliament to create a workable deal has only led to frustrations and apprehension at every level of UK society. However, the continued delays also present an opportunity for the industries that will be affected by Brexit, if it ever happens, to better prepare for the UK’s departure. This is a particularly important chance for the advertising industry since the UK is the fourth largest market for advertisers worldwide and the largest European market.[1] In addition, the UK advertising sector employs around 25,000 people, with a number of them coming from the EU.[2] It is critical to understand what kind of effect Brexit may have on this sector, given its economic weight. Brexit will dramatically influence the state of the UK’s advertising sector, and in some cases, it already has.

At this time, there are two options for Brexit (except for Britain staying or a new referendum being proposed). The first is some variation on the Withdrawal agreement proposed by Prime Minister Theresa May.  Unfortunately, this deal has been unable to make it through the British parliament, losing with historic margins.[3] The other option is the dreaded “No Deal” Brexit, which would involve Britain leaving the EU with no deal and an immediate severing of ties and services, which edges ever closer to reality. While Brexit is still rife with uncertainty; it is important to consider the worst-case scenario and prepare accordingly.

Advertisers have put time and energy into examining the ramifications of a no deal Brexit on the industry. In terms of immediate economic impact, a report by the Guardian found that the British advertising industry could decline by around three percent this year and account for a loss of around 1.36 billion pounds.[4] Even though Brexit has not gone through yet, British advertisers already expect to tighten their belts. Other areas of uncertainty extend to the status of all regulations passed by the EU and what effect they will have on the UK. For many regulations, it is unknown at this time whether they will be completely adopted in a post-Brexit society or if the UK will or will not attempt to create their own laws similar to the EU regulations they are currently bound by.

Talent is another area where Brexit represents a concern. The limits placed on free movement and employment following the implementation of Brexit in its ultimate form could limit the available pool of employees, since a lack of free movement and issues regarding long-term visas would likely deter future talent.[5] Some companies have responded to this concern, as well as the possible economic hardships caused by Brexit by beginning the process of relocating to the EU to avoid issues created by Brexit, maintaining their place in the single market by moving to regions such as the Netherlands.[6]

Advertising firms are already feeling the effects of Brexit and taking steps to prepare for the worst: The question remains how to best address the concerns created by Brexit, which can’t be confronted until we have a clear answer regarding what’s going to happen, essentially creating a paradox. Still it may be a good idea to brace for the worst.

[1] Fuller, Steve. “UK: Advertising Industry – Statistics & Facts”, Statista.
[2] Number of employees at advertising and media agencies in the United Kingdom (UK) from 2007 to 2017, Statista.
[3] BBC “Brexit: Theresa May’s deal is voted down in historic Commons defeat” (15 January 2019), BBC.
[4] Sweney, Mark. “UK advertising market faces recession under no-deal Brexit” (14 January 2019), The Guardian.
[5]Borestrom, Fredrik. “Brexit: how the advertising industry can safeguard talent” (3 April 2018), Campaign.
[6] The Drum Reporter. “As the UK prepares for Brexit, the nation’s advertising industry moves into uncharted territory” (24 June 2016 ), The Drum.