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Brexit will lead to changes – eventually

Following the decision by Britain’s voters that the UK should quit its membership of the European Union, British and international industry members have been taking turns to jerk their knees, guess and scaremonger about the implications.

The reality is that there’s a considerable amount of wait-and-see involved but that nobody – in the UK, in the EU, or here – needs to worry in the short term. European producers should be far more worried about the EU plans for a digital single market than about redefining their relationship with UK producers.

From a NZ industry perspective it’s hard to see much good or bad in the UK’s decision at this stage. Nothing will change for a while and the UK generally will be working to maintain if not improve its relationships with non-EU partners in many areas of business. With, possibly, less incentive to work with EU screen industry partners, more UK producers might be more open to developing co-production projects with producers from elsewhere.

NZ producers haven’t been involved in many productions that needed UK partners’ access to EU (rather than country-specific) incentives to get over the line. Regardless of arrangements with UK producers and how those might or might not change, NZ already has co-production treaties in Europe with Denmark, France, Germany, Ireland, Italy, Poland and Spain, as well as with the UK. Co-productions with partners from those countries wouldn’t be affected by the UK exiting the EU.

In the last decade, NZ has made less than 20 feature and TV co-productions with EU (including UK) partners. Some of those have been pretty much financial rather than cultural co-productions, with very limited NZ creative input. None of those productions have been with UK and other EU partners. All of those productions have been with EU partners who have a co-production treaty with NZ. It’s hard to argue that any of those productions would have not gone ahead if the UK was not part of the EU.

In an overall sense, the UK would be better off following its exit from Europe. The country is the third largest contributor of cash to EU coffers. In 2015 the UK paid £13 billion (NZ$26 billion) into the EU pot. The EU spent £4.5 billion ($9 billion) in the UK – much of it on farming subsidies.

By exiting Europe, even if the British government covers the spending the EU was making in Britain, the UK will be £8.5 billion ($17 billion) better off each year. It’s not a large amount for a country of 64 million people, but it is enough to pay the salaries of half a million new teachers or nurses – at a time when Britons believe the quality of their public services is diminishing.

The vast majority of the grants and incentives offered in the UK to support screen production (domestic, co-production or inbound) are paid from UK funds, not EU funds such as the Media Programme.

Although some UK producers have cited loss of access to that scheme as a disaster, the Media Programme spends a very small amount in the overall scheme of things. UK producers and distributors received c£10 million/$20 million from the scheme in each of the last two years. Last year UK pay TV service Sky spent over £600 million on UK-created content, and that amount was less than each of the two major free to air broadcasters, BBC and ITV, spent.

It’s also fair to acknowledge that some of the productions made with EU support were made in large part because that funding was available. Producers aren’t dumb as a rule; under different rules different projects will be developed to access other schemes or the same schemes in different ways. No doubt they’ll generate the same but different amounts of work and deliver the same but different mix of good, bad and somewhere in between film and television.

While the UK screen production industry has strengthened considerably in the last decade, in large part that has been as a result of UK not EU money and legislation. The industry has also demonstrated that the country receives strong financial return from the funds it does provide. One Oxford Economics report claims a return of £12 for every £1 of subsidy or incentive spend. There seems little chance the UK government would wish to discontinue such support, especially as many of the projects supported by those incentives are with US rather than EU partners.

Where there is a real risk of loss to the UK industry is in multi-national companies – production or distribution – that have their European headquarters in the UK. The results of the exit negotiations will determine how many of those companies feel a need to relocate to mainland Europe. As far as distributors are concerned, there’ll be changes imposed on their business anyway when the EU digital single market goes ahead, and those changes will probably reduce the number of players.

Over the next couple of years, the detail of the UK exit will become clear. The process hasn’t begun and doesn’t begin until the UK gives notice to the EU of its intention to exit. That’s probably not going to happen until a new PM replaces David Cameron in October.