With the government due to begin the two-year Brexit negotiations at the end of this month, an extensive report has been published by UKIE on how the games industry is bracing for the worst case scenario.
Brexit has brought a period of uncertainty that has split the nation on whether it will ultimately leave the country better or worse off. Record levels of investment and employment paint a positive outlook about the resilience of the UK economy, but there are more factors at play which could go right or wrong for the nation.
"We have a strong foundation on which to build, but must ensure we achieve a positive outcome from the negotiations to secure the continued growth of the British games industry," says Chris White MP, Chair of the APPG for Video Games.
The general feeling of the EU is that it plans to ‘punish’ the UK as not to encourage others to leave the bloc, however, this confrontational tone has softened over past months as reality set in that it’s within the interests of both sides to have a friendly working relationship for economic, defense, and security reasons.
While a good relationship with the EU is important, with Brexit the UK is hoping to expand its horizons beyond Europe and embrace global trade. It will be securing deals with economies such as the US, Australia, China, and Canada, that will ultimately decide whether Brexit is a “success” or not.
For businesses used to focusing their trade within Europe and benefitting from the free movement of labour for a skilled or cheaper workforce, Brexit is certain to cause a period of change. Trade may have to move to growing international economies – whose size could bring increased opportunities – or it may continue to Europe if the EU decides on a fair deal. Free movement of unskilled labour will almost certainly end, but a policy which makes it easier for people with desirable skills around the world to migrate to the UK will open up an even bigger talent pool.
These are ideal and feasible scenarios on which the various campaigns for Brexit were fought, but ultimately it will be up to the government to, in its own words, make “a success of it” with relevant policies and deals. Some businesses are naturally looking to avoid the uncertainty and be sure to continue business as usual by considering a relocation of their business to countries within the EU.
In fact, 40 percent of the respondents in UKIE’s research for their report say they are considering a total or partial relocation of their business to another country following the result of the referendum.
The 55-page report aims to highlight the game development industry’s concerns to MPs as they enter negotiations, as well as offer guidance to businesses on how to mitigate Brexit economic and labour-based uncertainty.
"We know that evidence is key to informing policy and want the information presented in this report to inform the direction that the country will follow both in our upcoming negotiations with the EU as well as our ambition to become a truly Global Britain – home to top diverse international talent, pioneers, and innovators from the tech and creative industries who'll shape the world ahead," reads a statement from UKIE CEO Dr Jo Twist OBE.
"The UK games industry blends the best of British innovation and creativity and we have the opportunity to lead the world in AI, VR, AR development through what we do in the games industry. We look forward to working with Government to seize the opportunities in key areas such as skills, immigration, and public funding reform to create a 21st Century globally competitive future."
Of the creative industries, the ‘Games, IT, and Software’ category is by a wide margin the most valuable (£8.8bn) UK export. In the top spots, this is followed by ‘Film and TV’ for £4.7 billion, and ‘Advertising’ for £2.8 billion.
It’s clear the government needs to make quick changes to immigration policies to ease business concerns of skill shortages post-Brexit. Of the companies who participated in the research, 61 percent said they relied on international talent. 35 percent of their workforce comes from the EU, and 17 percent from elsewhere. Most notably, 40 percent observed more difficulty in recruiting and retaining overseas workers due to current uncertainty weakening UK attractiveness.
With rules preventing negotiations prior to Article 50, the official withdrawal notice which begins the two-year negotiation period, being triggered, both the UK government and the EU have been criticised for using citizens living within each other’s borders as “bargaining chips” by not guaranteeing their rights to remain post-Brexit. Considering such a high percentage of workers are from outside the UK, this guarantee must be made swiftly. 65 percent of the businesses claim to hire international talent due to “a shortage of the right skills in the UK."
There is some positive outlook from respondents on Brexit opening greater opportunities for the games industry in the long-run as trade agreements with major growth economies such as China and the United States – who have high levels of game-related consumption – come into place.
It’s clear the game development industry must be considered during the Brexit negotiations, and policies tailored at ensuring a smooth transition. Current initiatives such the video game tax relief must also be preserved. UKIE’s report highlights some of the potential issues and offers guidance on what should be prioritised.
You can grab the full report here.
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