The designer’s guide to Brexit

Rss Bot · September 21, 2017

Many people in the UK spent 24 June 2016 in a state of shock in the wake of the previous day’s Brexit referendum. Whether you're anxious or excited about the UK's future after we exit the EU in 2019, Brexit is certainly going to involve some changes.

But what does Brexit mean for the design industry, and designers? We spoke to a range of successful UK design businesses – from boutique studios to vast global networks – to gauge what effect, if any, they’ve seen so far since the vote; and how they propose to weather the potential storm on the horizon.

We look at the impact Brexit could have on UK design jobs and recruitment; winning and retaining clients; and studios’ cashflow and profitability. Let's discover what Brexit could mean for you, starting with a look at how Brexit is progressing so far.

According to Michael Dougan, professor of European law at the University of Liverpool, the UK Government doesn’t have much of a hand to play with in the Brexit negotiations. “The UK entered its withdrawal negotiations from a position of extraordinary weakness,” he argues.

“There is not only a serious degree of under-preparation, but also a national viewpoint dominated by ideology – with all its usual ignorance and arrogance – rather than informed, pragmatic policy. As a consequence, events could not be going any further from the UK Government’s ‘plans’.”

An impact on multicultural design

Dougan’s inverted commas speak volumes: from the outside looking in, anything resembling a coherent plan certainly seems a long way off. So how can creative businesses in the UK prepare for the unknown?

For Tim Lindsay, CEO of D&AD, diversity and multiculturalism is what makes the UK one of the world’s great creative hubs – and he laments proposed measures such as fingerprinting for new immigrants.

“We are becoming a country that slams the door on visitors, and turns its back on our neighbours,” he argues. “Apart from the fact that every competent authority agrees this is suicidal for our economy, it will have a seriously negative and specific effect on the creative industries.“

D&AD's CEO Tim Lindsay believes Brexit could be devastating for the UK's talent pool

“It's no coincidence that great design, advertising, fashion, music, film, architecture, food and much more besides are generated in the most multicultural city on the planet,” Lindsay continues.

“How can we seriously doubt that 'taking back control of our borders' will deter talent from coming here, and cause a significant exodus too?”

The best-case scenario

Of course, experts have been wrong before. Could the best possible Brexit outcome see the UK’s design sector even better off outside of the EU?

The UK’s longstanding global reputation in this field, as well as its critical mass of world-class agencies, are two of its biggest assets. But with many of those agencies drawing on EU talent and working with EU clients, closing the borders is only likely to be detrimental.

“The best outcome is an open-door policy that encourages creative talent into the UK, and the affords us freedom to do international business without layers of added administration and cost,” suggests Sue Strange, brand and strategy director at Manchester-based studio Music.

Taxi Studio's recent project The København Collection for Carlsberg is inspired by the brand's Danish roots

Bristol-based Taxi Studio's clients include one of Europe’s biggest breweries, Carlsberg. Its commercial director, Adam Ray, believes breaking away from collective EU policies that are perceived to be restrictive may have a positive impact: “Favourable trade agreements could help reduce barriers to global markets,” he points out.

Simon Elliott, co-founder and creative director at London-based consultancy Rose Design, is less optimistic – and he dreams of a second referendum to make it all go away. “The next best thing would be a softer Brexit, allowing freedom of movement and trade, without red tape, for us, European clients and European staff.”

The worst-case scenario

GBH co-founder and creative director Mark Bonner fears that the UK Government will “behave petulantly” and irritate its EU neighbours by pushing for a so-called ‘hard’ Brexit deal.

“I think 'tit for tat' policy restrictions could begin to throttle our ability to trade and move freely,” he reflects. “Philosophically, the referendum decision was a sad reality for us all at GBH, as we enjoy collaboration right across Europe with a whole host of clients.”

Perhaps unsurprisingly, Strange’s worst-case scenario is the polar opposite of what she hopes will happen: EU talent is discouraged from working in the UK, and the cost of doing business in Europe becomes prohibitively expensive for small independent agencies such as Music.

Elliott concurs about the impact on smaller outfits: “Leaving Europe without a decent trade deal in place can only make life harder for businesses like ours,” he says. “We currently enjoy the freedom of working with whoever wants to buy our expertise.”

With 25 offices worldwide, Landor Associates' global clients include Abu Dhabi-based airline Etihad

At the other end of the scale, Peter Knapp is global creative officer at WPP-owned branding network Landor Associates, which has 25 offices worldwide – including several in EU countries.

“The worst case for us will be that the local market loses economic confidence, and local UK clients invest less in creative solutions,” he believes. “Either way, it’s really important that the UK continues to be seen as a leading global force in creativity.”

Next page: What Brexit means for design jobs and recruitment

Recruitment is a concern for the design industry in a post-Brexit world: rather like the Premier League football clubs that wow audiences around the globe, many of the UK’s world-class agencies have recruited from a Europe-wide talent pool to build a winning team.

With immigration one of the top bones of contention in the EU referendum campaign, the question of freedom of movement is critical – not just for the risk of discouraging new recruits from crossing the Channel, but potentially for driving existing staff back to their countries of origin.

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Here, we explore how Brexit has impacted recruitment and retention of staff so far, and how you can prepare for different eventualities.

Free movement under debate

According to EU law expert Michael Dougan, the Government simply can’t have its cake and eat it: “As the European Council has repeatedly affirmed, no relationship – no matter how close – can offer the same benefits as EU membership,“ he insists.

Retaining access to that all-important Single Market for trade without agreeing to free movement – not to mention conforming with the EU’s various regulatory standards – Dougan considers impossible.

“The EU will insist on a level playing field in areas such as competition and state aid,” he adds. “It will safeguard against unfair competitive advantages regarding tax, social and environmental dumping, for instance. And the UK will pay for such privileges, just like everyone else has to.”

These are, says Dougan, basic and inescapable facts: “And yet, the UK Government continues to make fantastical demands in one breath, while laying down ‘red lines’ about immigration and judicial supervision in the next,” he adds, “apparently oblivious to the price that must be paid.”

Clearly, while negotiations are in progress we are in no position to guarantee whether free movement will continue for your staff – but we can provide some advice for staying on top of your game, whatever happens...

Try to boost staff morale

On the morning of 24 June 2016, EU citizens living and working in the UK had an extra wave of insecurity about their personal situations, and in design studios up and down the country, the fear was palpable.

“They were anxious and concerned for their futures in the UK, unsurprisingly,” recalls Rose Design’s Simon Elliott.

Likewise, the atmosphere at Taxi Studio was “a tangible sense of disappointment”, adds Adam Ray.

SomeOne created the entire 'brand world' for the Baku European Games in 2015

But for SomeOne's Simon Manchipp, it’s about maintaining a positive attitude and confidence in the face of that uncertainty: “Most have laughed it off,” he shrugs. “They know their talents outshine their passport. They could work anywhere on the planet.”

Focus on talent, not location

The ‘brain drain’ effect has started in places: Rose has lost staff since the vote. “This time last year, nearly 50 per cent of our team were originally from EU countries,” reveals Elliott. “Several have left us, not entirely on account of the vote, but it was a contributing factor.”

A collaboration with artist Mark Wallinger, Rose's Labryrinth: Art on the Underground won Best of Show at 2014's Brand Impact Awards

Not only is existing EU talent departing the UK, but in some cases they are applying in smaller volume for jobs in the first place: a phenomenon that Sue Strange has seen over the past year at Music.

Interestingly, Johnson Banks has observed the polar opposite effect: “We’ve had a huge influx of applications from Europe,” reveals creative director Michael Johnson. “Applying before the wall goes up, perhaps?”

A diverse talent pool to draw from can only be a good thing, but Ray points out that country of origin is only one factor. “We’d never make a concerted effort to recruit from a certain geography. Portfolio and personality are far more important,” he adds.

Cast the net even wider

Of course, if talent comes first then it follows that agencies should look globally, visas permitting. “We have a wide mix of people, from Malta to Malaysia,” declares Manchipp. “Diversity is important to have in any creative business, as it contributes to a richer outcome.”

Like SomeOne, Johnson Banks works with clients around the world, and its recruitment policies are likewise very open-minded. “We’re still mostly British, but have taken freelance and permanent staff from further afield: the USA, Singapore, Sri Lanka, New Zealand,” reveals Johnson.

Johnson Banks underwent a hugely ambitious, 'open-source' branding process for US-based client Mozilla

With less than 10 staff at any one time, Johnson Banks is tiny compared to a global branding behemoth like Landor, for which the global nature of its network is reflected in the staff.

“It’s a healthy mix from all over the place, which reflects our mix of clients,” confirms Peter Knapp.

Don’t neglect the grass roots

Recruitment of fully-fledged designers from overseas is one thing, but if Brexit has a sway on international student numbers, it could also have a knock-on effect further down the line.

Strange has already observed a sharp decline in international students, and Johnson considers the potential impact of Brexit on education to be “significant”.

But Mark Bonner and Simon Manchipp contend that students will continue to be drawn to the top design colleges.

Manchester-based Music's recent branding for Powerleague engaged with the grass roots of football in the UK

“The quality of education in the UK is a beacon, and will still be highly prized on a global stage,” argues Manchipp. “The mix of students may alter, but I've been seeing a steady rise in students from Korea, China and India prior to any mention of Brexit anyway.”

“If the UK’s reputation is maintained, students will still want to be educated in one of the world’s strongest creative cultures,” adds GBH's Bonner, “regardless of our political and economic affiliation with the EU.”

He cautions, however, that the current government’s lack of recognition of creative industries as key economic drivers – and an accompanying lack of investment in the arts – is in many ways a much bigger long-term concern than Brexit on this front.

Next page: What Brexit means for winning and retaining clients

Another crucial consideration when attempting to prepare your design business for Brexit is the effect on your clients: acquiring and retaining them domestically, across Europe, and beyond.

There are no certainties here, but tertiary industries such as design and advertising are liable to be hit early if client profitability is squeezed by unfavourable trade terms, or other Brexit-related factors.

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“The UK cannot simply wish away the inherent problems of international trade; especially the challenge of tackling non-tariff (regulatory) barriers to cross-border trade in goods and services,” is EU law expert Michael Dougan’s take. “When it comes to the provision of services, the UK seeks an entirely novel deal, with no clear international precedents.”

Read on for some essential advice to help your studio win, and retain, a healthy balance of clients in the lead-up, and wake of, Brexit.

Calm your clients’ nerves

One possible side-effect of the ongoing uncertainty is that clients become jittery, and consequently risk-averse. “I’m already sensing a bit of nervousness in the client community,” admits Michael Johnson. “When clients are nervous, projects go on hold and confidence slips.”

Three-quarters of SomeOne’s business is outside the UK. The agency witnessed a hiatus, but only a brief one: “Confidence was knocked,” admits Simon Manchipp. “Many clients held their breath and projects slowed, but they've realised that this is a lengthy process. Back to work.”

Continue business as usual

Other agencies have not witnessed any tangible effect so far, including The Partners, which landed European cultural channel Arte as a client a few weeks after the referendum (see the video above and picture below).

According to UK creative director Stuart Radford, creative ambition from clients is as strong as it’s ever been.

The Partners collaborated with Lambie-Nairn on Arte - the agencies will soon merge, along with three other WPP stablemates

EU clients account for 55 per cent of GBH’s total business. Fortunately, it remains business as usual there, too: “They understand that we’re passionately pro-EU, and are determined to work across boundaries,” reflects Mark Bonner, who admits he spent the morning after the vote calling them to apologise.

“They universally took the piss out of the UK’s decision, and continue to rib us constantly,” he chuckles.

For Rose Design, those proportions are reversed and it has a more UK-centric business: 30 per cent of clients are in the EU, 15 per cent are global, 55 per cent are local. The studio has seen some budget cuts, some projects pulled, and other clients being reluctant to commit too far ahead.

“Others are not as confident or brave in their commissioning as before,” reveals Simon Elliott. Despite these setbacks, he adds that Rose has observed an upsurge in EU client interest in the past year and predicts that the next 18 months could prove “quite fruitful” as a result.

Consider serving clients locally

Of course, if location does prove an issue for clients there may be the option to bring the team to them, setting up an overseas outpost or collaborating with local talent where applicable.

As part of its 25-office network, Landor can boast outposts in Paris, Hamburg, Geneva and Milan. “We will consider opening more if and when any EU country looks like it could be a place to prosper,” says Peter Knapp.

GBH set up a 'pop up' studio in Boston when working on its total overhaul of The Verb Hotel

On a much smaller scale, GBH has been known to set up ‘pop up’ studios to cater to specific client projects, and did so in Boston in 2014 and 2017.

“We wouldn’t hesitate to do this wherever needed, and with the growth of platforms like WeWork across the EU, it's easier than ever to operate in client cities with low overheads,” adds Bonner. “A UK hub office may continue to make sense, but it may not.”

Play to your strengths

One of the pro-Brexit campaign’s arguments is that breaking away from the EU – while likely sacrificing the benefits of the Single Market – could open up even more lucrative trade avenues with the rest of the world.

Many of the agencies we spoke to enjoy a worldwide client base that to some extent transcends the Brexit issue.

“We've become more attractive to a global audience,” agrees Manchipp. “Europe is a huge force, but China, India, America all have epic scale, and audiences that are appreciative of the transformative outcomes that smart commercial creativity can bring. As soon as we became more affordable, they pounced.”

SomeOne's major rebrand of Eurostar back in 2011 had to appeal equally to customers in the UK, France and Belgium

Stuart Radford emphasises the enduring reputation of the UK design scene as an attraction to clients. “I don’t see that changing as a result of Brexit,” he says, although he does predict a reduction in the total number of quality commissions for the best agencies to fight over.

“UK designers are good at solving the most challenging of briefs, and often our creativity thrives from those more adverse parameters,” continues Radford. “If the economy is struggling, brands have to fight harder for their position in the market.

"Creativity will be in demand, and it’s those businesses that have the foresight to invest in their brands that will not only weather any storm but thrive in it.”

Next page: How Brexit may affect cashflow and profitability

Recruitment issues can affect the creative output and operating model of a creative agency, while client acquisition and retention naturally have an impact on the longevity of the business, as well as its profitability.

But Brexit may also have an effect on other aspects of your bottom line: from fluctuating exchange rates to operating costs, as well as client budgets that can be tied to much larger economic forces.

Let's see what all of this could mean for creative businesses.

Keep an eye on the market

EU law expert Michael Dougan contests that the primary goal of Brexit negotiations is not to improve trading conditions with the EU, but rather to minimise the mutual loss of market access. And the outcome will have a knock-on effect on various industries, including design.

“In less than two years’ time, the regulatory conditions for UK companies doing business across Europe, and vice versa, are set to become substantially less favourable than they are now,” Dougan explains.

“That will actively create a vast array of barriers to trade. At best this will increase costs, and at worst it will seal off markets. Different sectors will obviously be impacted in different ways and to different degrees, but the overall effect is not in doubt.”

Pay attention to fluctuating exchange rates

One spin-off of working with overseas clients as a UK studio, of course, is payment in different currencies – which can be both a blessing and a curse, particularly given the effect of news such as Brexit on the financial markets.

GBH has a long-running relationship with Paris-based designer Philippe Starck, and recently designed this range of perfumes

At GBH, 45 per cent of billings are in Euros, and a further 20 per cent are in other global currencies. “I expect overseas clients to move towards paying directly in GBP, if the value of the pound continues to fall,” suggests Mark Bonner. “For now, well-judged Forward Exchange contracts are our friends.”

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Rose bills less than five per cent in Euros, but US Dollars accounts for up to 20 per cent of its business. The studio experienced the effect of the erratic GBP-USD exchange rate first-hand on one large Stateside project this year, during which the dollar fluctuated from 1.35 to 1.16 against the pound over the course of the eight-month process.

“We billed each stage on completion, so the rate of exchange was quite different at each payment,” recalls Elliott. “Despite anticipating – and allowing for – currency fluctuation within our initial cost estimates and agreed budgets, it was a bit of a rollercoaster and made us pay a lot more attention to foreign exchange rates than we ever thought we would.”

Use a weak pound to your advantage

A weak national currency can have upsides as well as downsides, most notably in that it makes UK businesses seem more affordable to overseas clients where the exchange rate is more favourable.

“We’ll continue to be an attractive option for a while yet, to potential European clients wanting to buy the best of British design,” predicts Elliott. “Beyond that, it’s difficult to legislate for how tough the EU will choose to be, and how much red tape it will put in place, to make access to working with us less attractive for member countries.”

"The best of British design" - Rose's clients include the V&A Museum

“The depressed GBP value against the Euro and USD has made us more attractive to EU, US and Asian clients,” confirms Bonner. “We want our clients to continue to see us as terrific creative partners, and great ROI for their businesses. We have been selling Euros and USD in the Forex markets for more than 15 years, so often maximise this opportunity.”

Johnson Banks has also witnessed the effect, and many of the studio’s recent clients have been Stateside. “A weakened pound does technically make us ‘cheaper’ to overseas clients in the short term,” Johnson concedes, “but I’m sorry to say that I think the UK will be financially, culturally and philosophically weaker for leaving the EU within five years.”

Consider economies of scale

Small businesses such as Johnson Banks certainly have fewer overheads, are less dependent on bringing in large contracts to keep staff in work, and are arguably less exposed to market forces that could buffet a larger business from all sides. “I think we will ride it out,” predicts Johnson.

The Partners' stunning work for London Symphony Orchestra won Best of Show at this year's Brand Impact Awards

WPP has taken the opposite approach, with the recent announcement that The Partners, Brand Union, Lambie-Nairn, Addison Group and VBAT will all merge into a new 750-strong super-agency in 2018.

“This is not as a result of Brexit, but in response to the changing needs of clients and the opportunity for growth and creative impact on a large scale,” explains Stuart Radford.

“The new company will operate throughout 20 countries, so that, as a business, we will be less reliant on what’s happening within the UK – positioning us well to weather any potential downturn in the UK economy.”

Next page: How to prepare for the future

We conclude our design studio’s guide to Brexit with some general advice for weathering whatever may be on the horizon in the short, medium or long-term for your creative business.

When it comes to a deal, EU law expert Michael Dougan is far from optimistic: “The chances of a new trade relationship being in place by 30 March 2019 were never better than zero,” he insists. “And thanks to the UK Government’s consistent mishandling of the negotiations, the chances of securing even a basic transitional deal are fast receding too.”

“As Michel Barnier has warned again and again: the UK’s real transitional period began on 29 March 2017,” adds Dougan. “The time for everyone to make their preparations is now.”

So what, as a creative business, can you actually do to prepare? Read on for five tips to help your studio thrive despite ongoing uncertainty…

01. Focus on creating great work

For many, the key to navigating this quagmire of uncertainty is brutally simple: prove your creative prowess, and that your ability to attract clients is because of your work, not your country of origin.

“Until things are clearer, the only insulation we believe in is great people doing great work,” shrugs Taxi’s Adam Ray. “It’s got us to where we are, and we trust it’ll drive our business forward over the coming years. Why? Because impactful, effective design is good for everyone.”

“Like everyone else, we’ll fly the flag for the UK creative industry by working bloody hard to deliver a great product,” agrees Music’s Sue Strange. “We’ll network our socks off, and keep our fingers well and truly crossed.”

02. Seek out out the very best clients

Ultimately, design is a service industry - driven by client demand. Don’t let Brexit dampen your ambitions for thinking globally and pitching high.

“GBH continues to work well with EU clients, and we see no reason for that to decline, but rather every opportunity for that to thrive,” believes Mark Bonner.

“Indeed, it’s possible that GBH could work entirely with overseas clients within five years,” he continues. “If we continue to find non-UK clients with open minds and wonderful projects, then we will go to the ends of the earth to work for them. If we can still find them at home, we would be doubly delighted.”

03. Be sure to hedge your bets

SomeOne works across a huge range of client sectors, and Simon Manchipp warns against putting all your eggs in one basket as a studio.

“It’s a great way of screwing up a business,” he argues. “We keep things broad. We are not overly reliant on any one sector: client or country. We have always done this, and it helps weather any storm as well as keeping things more interesting and fun.”

“Stay lean. Stay agile. Work with a broad spectrum of projects across many disciplines, sectors and locations,” is Manchipp’s advice.

Rose also boasts a significant proportion of overseas clients, and Simon Elliott advises following suit to keep the opportunities broad and avoid relying too heavily on domestic business, especially in sectors which could be hit harder by Brexit.

Unlike SomeOne, however, Elliott doesn’t believe in diversifying Rose’s offer. “On the contrary, we are looking to tighten it up even more, so that international clients come to us specifically because they want what we specialise in,” he adds.

04. Have confidence in design’s resilience

“Design is a barometer of the economy,” believes Manchipp. “We feel financial fluctuations first. We are the first to falter and the first to fly. It's design’s ingenuity that gets it in the room quickly, and enables it to recover rapidly.”

Sue Strange agrees that the design industry is by nature a positive force on the economy, and can help address the bigger issues at hand for the country if given the investment it needs.

“Creative and tech industries have a huge part to play in bolstering towns and cities decimated by austerity in the UK,” she believes. “Some might say this decimation played a sizeable role in the Leave vote.”

“The government needs to pull its finger out, invest in education in our sector, and future-proof the UK talent pool for generations to come,” she adds. “Better off out? No. But with smart and sustained investment in our future talent, we’ve got a fighting chance of not going backwards.”

05. Help shape the future of UK design

Until negotiations conclude, no-one knows what Brexit will bring. All of the agencies we spoke to are optimistic that they can survive and thrive in whatever climate they are left with, but they universally condemn the Brexit decision, which Simon Manchipp derides as a “dumb move”.

“I can see no benefit to what amounts to shooting oneself economically in the foot for dubious ‘sovereignty’ and ‘immigration’ reasons,” agrees Michael Johnson, and while Mark Bonner can see some immediate benefits, he cautions against navel-gazing as an industry.

“I think the biggest danger is that the UK creative industry forgets to market is tremendous qualities to its EU, US and Asian neighbours, and becomes an insular service industry working within its own borders,” he says. “But given its global reputation, and the intellect of its people, I cannot see such a lack of vision being likely.”

“I don’t think Brexit will affect our global standing as design leaders,” agrees Simon Elliott. “On the contrary, if working in Europe becomes more difficult for successful UK-based design companies, we’ll look further afield. It won’t change the quality of what we do, it’s only likely to affect the geography and demographic who buy it.”

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