6 February, 2023

Back in 2021, we listed a few predictions on how Brexit would affect the art market, some of which included a loss of the UK’s competitive advantage, difficulty in forming international collaborations and a drop in interest for British art. Three years on from the UK’s withdrawal from the European Union, the effects of this decision are being felt across all industries, and we have seen several of our predictions become a reality. In this article, we assess what has the concrete impact of Brexit on the art market been so far and whether, amongst the pessimistic news headlines, there is still room for optimism. 

The start of 2023 has been governed by uncertainty for the art market. For one, the UK art fair landscape is looking drastically different, this year, as Masterpiece, and more recently, the Art & Antiques Fair Olympia, have cancelled their summer events in London, citing ‘escalating costs’ and a ‘lack of dealer commitment’ (Anny Shaw, The Art Newspaper). Both organisers made it very clear that Brexit was the root cause of their withdrawals, with Masterpiece particularly hinting at a lack of attendance of European collectors due to the travel complications of Brexit. The cancellation of Masterpiece hit the London art crowd particularly hard, as Head of Sales and modern British and 20th-century art specialist at Roseberys William Summerfield states, “The fair had a very particular style that was entirely ‘Chelsea’ and I think a lot of non-'artworld’ buyers and visitors were more comfortable with (it) than some of the other, larger fairs” (as cited in Kakar, Artsy). The wide-reaching fear now is that losing such major events can lead to the cancellation of other key fairs for London and the wider UK market. This is a question that is currently left unanswered. 

Aside from its tangible consequences on art fairs, Brexit legislation is also playing a major, negative role on art trades, leading to an accumulation of red tape. Some of the branches affected include taxation, employment, copyright and even data protection. The main issue, however, is that it is becoming much more complex to move art and artists across the UK border. 

In many ways, the COVID-19 pandemic masked some of the dire consequences of Brexit; however, with a return to the ‘new normal’, these are now in the spotlight. Undeniably, the UK’s share of the global art market has dropped to its lowest level in a decade, and even Christie’s has observed a ‘drop-off’ on EU consignments in London (Artsy). Collectors, both from within the UK and abroad, are feeling these disruptions, while dealers are complaining about the supplementary value-added tax and increased shipping costs. Smaller galleries, on the other hand, are feeling the burden of the extra paperwork. This has all worked in favour of other EU markets, especially the French market, which saw record-breaking results at its auction houses last year. 

Overall, the picture seems quite bleak for the UK art market. However, let us not forget the British motto: “keep calm and carry on”. Yes, things may seem disappointing right now, but many experts are confident that London and the wider UK art market will bounce back. Galleries have not closed their doors; museums are still hosting shows with international recognition; and outstanding artworks are continuing to sell. 

Moreover, when we think of London, we think of innovation. According to Tech Nation, the first three months of 2022 put the UK in second place globally for tech investments, after the US and ahead of both India and China for the first time. According to Gerard Grech, Founding Chief Executive of Tech Nation, “with more than 17 times growth in value at just under $1 trillion and investment over the last 10 years, the UK tech ecosystem continues to go from strength to strength”. This growing emphasis on tech investments is not only vital to the UK economy but also the key to further promoting it as a creative and innovative global hub, and this is reflected in the art market. Since the pandemic, we have seen rapid innovation within the art sector, from auction houses moving online to the emergence of innovative, new collecting models, such as fractional art ownership, to galleries experimenting with virtual reality and the metaverse. This is only expected to evolve, and we expect it to become a new means of attracting crowds back to the UK. You can find traditional ways of viewing and collecting art across the EU, but if you want innovation, come to London (for example). 

In addition, it’s important to gain full knowledge of UK tax law when it comes to moving artworks across the border, as, if the move is temporary (e.g. for an exhibition within the EU that is for a limited time period), then you the artwork importer may be able to obtain Temporary Admission (‘TA’) approval, whereby the artwork can be imported for exhibition with the intention to sell without the need to pay import tax. This carries another advantage, which is that, if the buyer is located within the UK, they will be recorded as the importer and pay the 5% import VAT, rather than having to pay VAT at 20%. If the buyer is located outside the UK or the work is unsold, then it will simply be re-exported from TA with no UK VAT implications. Once approved, TA can remain in place for two years. Given these advantages, LTArt is offering temporary holding of our Blue-Chip artwork, such as ‘Untitled’ by Marc Chagall, both within the UK and the EU for fixed periods, dependent on availability within the artwork’s calendar. 

While the UK currently finds itself on a learning curve, still adapting to its ‘new normal’, there are some consequences of Brexit, some of which are mentioned above, that just cannot be dismissed. That said, pessimism will not help the UK market recover. Amidst the uncertainty, there is also room for a reassessment of the role the UK wishes to play in the global market, with experts strongly hinting at it evolving to a centre for technological and innovative excellence. Similarly, if the art world is to be successful post-Brexit, then investment in creative tech needs to be fully embraced. 

Sources:

Anny Shaw, The Art Newspaper, ‘Another London fair cancelled: Art & Antiques Fair Olympia pulls summer event over ‘escalating costs’ and ‘lack of dealer commitment’

Arun Kakar, Artsy, 'How Brexit Is Still Impacting the British Art Market'

Carly Minsky, June 2022, Tech Nation, 'UK tech overtakes China to achieve record-breaking first quarter investment'