Following the results of the 2016 referendum, the minor majority of Britain have decided to leave the European Union.
Overwhelming disappointment, fear and uncertainty now floods the general consensus – alongside conflicting views of pride and xenophobia – as the nation begins to transition away from the 40-year-old institution.
Fear aside, momentarily, this departure is going to take time. For now, the UK will remain an EU member state for the next two years whilst our nation’s politicians negotiate our exit. Yet despite the amount of time it may take for the finer details to be determined, and whether or not it will actually take place, the consequences are unknown and a sense of insecurity is washing over the population. Additionally, if we look beneath the inevitable depreciation of the pound, higher taxes and xenophobia, many feel that the outcome has left them frustrated.
Can we predict what will happen? Are peoples’ voices being heard? And more specifically, what does Brexit mean for brands and their marketing strategies?
What is ‘Brexit’?
‘Brexit’: a recently coined term that now marks a pinnacle point in British history. As an abbreviate combination of ‘British’ and ‘exit’, this term, which you all are undoubtedly aware of, refers to Britain’s departure from the EU. This departure could inevitably create challenges for businesses and brands alike, so there are a few things that need to be brought to attention.
The EU referendum is a catalyst for doubt surrounding the stability of major brands, which includes sectors such as banks all the way through to travel and retail. Reed, the vice-chairman of the Britain Stronger in Europe campaign, said: “[the] UK is the best place in Europe to launch and grow a business; leaving the European Union will undoubtedly undermine the ability of Britain’s entrepreneurs to start up, innovate, and grow.”
Similarly, James Murphy, founder and CEO of the agency adam&eveDDB and fellow support of the remain campaign, argued that British brands and creative industries do in fact benefit from EU membership via direct investment and job creation. “The UK faces a choice between backing its creative sector, giving Brand Britain the boot it needs to carry on dominating the global market, and turning inward and stopping the cultural mill turning,” said Murphy in an opinion article for Marketing Week.
Before the referendum, many brands – particularly British luxury fashion brands, like Burberry – bought their fabrics and produce within Europe. The pound has now already taken a big hit and has fallen over 10 percent following immediate action after the vote. Due to a weakened pound, this could ‘send manufacturing prices soaring’.
On the other hand, as stated by the Wall Street Journal, this could create an opportunity for French and Italian fashion brands to further their market (coming from those who already make up half the global luxury market).
What does this mean for 'Brand Britain’?
‘Brand Britain’ is an identity based firmly on British cultural exports - whether it’s TV, literature, film, design or comedy. One in 11 jobs in the UK falls within the creative economy which supports a contribution of £84.1bn overall, according to statistics from the Department for Culture, Media and Sport. In fact, the UK exported a total of £17.9bn of creative services in 2013, including TV content worth £1.28bn. This complies with the second largest design sector that has exports worth £204m in 2013 (which has grown in recent years), plus the fastest growing digital economy in the G20.
Now, this is in jeopardy.
The EU is a vital market for businesses exporting UK culture and, with reduced trade barriers on the horizon, this can be crucial for those with massive export potential. For example, Europe is the UK’s second largest market for music exports and supports around 100,000 jobs in the UK. Plus, the UK benefits from massive foreign direct investment in its creative industries from EU countries.
What’s more, is that for many creative industries free movement provides an opportunity to travel, work and study across the continent. This is also a huge opportunity to promote British cultural exports in Europe. Lastly, the EU in itself is a source of substantial financial grants for the firms that drive ‘Brand Britain’, and the UK benefits with a grant application success rate that’s almost double the average across Europe; 1,200 projects in the UK were supported for over six years with funds in excel of £314m.
“Europe is by no means the be all and end all for us,” said Michelle Emmerson, chief executive of Walpole, who are currently working closely with its European partners to ensure stability. “It’s an uncertain time, but there will always be a market for quality and we may also see some short term export benefits in a cheaper pound. It is however vital that we retain access to the European Market and we urge the government to keep the luxury industry - worth more than £32 billion a year to the UK - in mind throughout renegotiations.”
What’s going to happen next cannot be deciphered, but there are a few things that can be taken on board to make this shift far less of a catastrophe:
- Plan ahead: Many economists agree that there is likely to be a recession next year as a result of the referendum. Therefore, this means you and your business should consider how you are going to guide through more challenging economic conditions. In this sense, consider what actions must be taken now and in the months to come, plus what actions should be taken when we eventually leave the EU.
- Review your business: At this moment in time, it’s crucial to review your supplies and assess whether they are likely to face trading difficulties in the wake of Brexit. Currently, UK manufacturers benefit from tariff-free fast import and export trade. This could all change in the future - with tariffs and/or physical delays becoming a problem.
- The pound: For those businesses who rely on importing and exporting, the foreign exchange variances could become significantly damaging as the pound falls. For exporters, this could be an opportunity to increase operations on the back of the cheap sterling – perhaps helping to expand operations overseas and into new markets. “This may be short term but it opens up quick marketing opportunities in other countries. There’s no guarantees that the exchange rates will remain the same over the long term, but if you’re nimble then you can capitalise on this opportunity to increase sales outside the UK,” said Al Mackin, from the Manchester-based Nudgr.io.
The final note
It’s fair to say that the negative impact of Brexit has outnumbered many positives. As it goes for many, the thought of turning our back on Europe would be a huge betrayal to the ambition that the UK’s brands and creative industries deserve.
However, now is the time for businesses to be bold and seize any and all opportunities as and when they arise. And, by making a few changes and by all means taking on some early preparation, we can only look at this change as a new opportunity to grow and expand.
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