Brexit and the art market (ctd.)

May 10 2022

Image of Brexit and the art market (ctd.)

Picture: TAN

It's almost six years now since the UK voted to leave the European Union, and time enough to be reasonably certain of any impact Brexit has had on the UK art market. The latest figures show it's not good news; for the first time, the UK art market has slipped from being the world's second largest to the third. There's not much escaping the fact that Brexit is in large part to blame.

In The Art Newspaper, Anny Shaw and Gareth Harris have been looking at the numbers, including research done by Dr Clare McAndrew for Art Basel's Art Market Report:

London will become “a shadow of its former self” in just five years if art imports continue to plummet, members of the trade have warned the British government, after it was revealed the UK’s global share of the art market fell by 3% to 17% last year—its lowest in a decade. The latest figures from HM Revenue and Customs, published in the 2022 Art Basel/UBS Global Art Market report, show that the value of art and antiques imported into the UK in 2020 was $2.1bn, down by one third on 2019. Imports fell a further 18% last year, leaving them at almost half the value of 2019.

The TAN piece also highlights the critical issue of import VAT, and quotes the art market specialist lawyer Pierre Valentin:

Brexit is thought to be the main reason for the sharp decline in imports, which have been further hampered by the pandemic. The art lawyer Pierre Valentin says: “The obligation to pay import VAT when moving art from the EU to the UK and the additional paperwork are considerable deterrents,” adding: “many European collectors have left the UK. The pound sterling has lost some of its value, resulting in sellers of more important works selling in New York rather than in London.”

I don't have any stats to hand, but from the little corner of the art market I'm most familiar with, Old Masters, I've certainly noticed a shift in particularly mid-level sales from London to auction houses in France and Germany, as well as places like Dorotheum in Vienna. In addition to the increased burden of import Vat, the UK market has not benefited from some of the other areas of Brexit it was hoping to, such as the abolition of the Artist's Resale Right, which the UK government committed to retaining.

I know good friends should never say, 'I told you so', but I did my best to warn everyone, as here in The Wall Street Journal back in 2017:

The great hope of Brexiteers in the UK art market is that after we leave the EU import Vat will be abolished. But it is hard to see how a cash-strapped Treasury will find the money to do this. In fact, there is a risk that import Vat will be extended to any artwork coming into the UK, increasing costs for dealers and drastically affecting an auction house’s ability to attract consignments from Europe. Nor is it at all likely that the EU will abolish Vat on artworks imported from a post-Brexit UK. Any EU-based collector wanting to buy a picture at Sotheby’s, or from a UK dealer, or at one of London’s many art fairs, will know that an extra 5.5% (at least) must now be added to their bill. It’s easy to see how, gradually, transactions that now take place in London might start to migrate across the Channel.

What can be done now? It's hard to see any change on the Vat regime coming now, but as Anthony Browne of the British Art Market Federation points out, import Vat on art raises relatively trivial amounts of money for the Treasury, £16m last year. Could the government be persuaded of the merits of a tax break for the art business? A good place to start might be a concerted effort by the art market to make a public case for its benefits to the UK economy, led not by art dealer types like me, but (say) by artists. For better or worse, we have a political system which responds to those who shout the loudest.

Update - a reader writes:

As an unrepentant secessionist, champion of the Norway option / (potential) owner of 3 passports, might I remind you that Article 50 came slightly after the vote and the time spent outside the EU, just over 2 years, hardly constitutes the panoramic view of human affairs suggested in your article.   

Also interesting to note that the UK art market (17%), having been eclipsed by China (20%), is still larger than the rest of the single market combined. China is a very interesting case – not really a nation, more a self-contained civilisation of a billion which will inevitably come to command a greater share of the global economy as the years roll on; by contrast the artistic heritage of the West cuts across many borders and is consumed /shared by many different countries.

A far more interesting question perhaps, is why a country as trivial as the UK had such a disproportionate share of the art market in the first place? You mention the Witt Library; I would also like it to reopen. I suspect it is precisely these places, as well as the many other archives, libraries and great museums, that give London such an advantage in the global art market

I have no idea how anyone would go about it, though it would be nice if someone could gauge in tangible terms the value of such places to the British art trade (and by extension the British economy) – not least because it might allow us to put forward a more persuasive case for their reopening and continued use.

Notice to "Internet Explorer" Users

You are seeing this notice because you are using Internet Explorer 6.0 (or older version). IE6 is now a deprecated browser which this website no longer supports. To view the Art History News website, you can easily do so by downloading one of the following, freely available browsers:

Once you have upgraded your browser, you can return to this page using the new application, whereupon this notice will have been replaced by the full website and its content.