As the shock of the UK’s surprise vote to leave the European Union sinks in, tired eyes and weary minds now are turning to the consequences of the fateful referendum. In terms of process, the only concrete steps we know so far are that there will be a new leader of the Conservative Party by October following Prime Minister David Cameron’s resignation today. In his speech, Cameron recommended that the new leader should be responsible for invoking Article 50 of the Lisbon Treaty.
That’s the clause that allows for the formalization of the UK’s divorce from the EU. That has a two-year limit on it to negotiate the UK’s exit and subsequent relationship with the EU. Some observers already have stated that two years is a limited amount of time to negotiate and agree on everything from the UK’s relationship with the single market to questions of immigration and freedom of movement.
In a blow to those hoping for this period to be extended — in so doing allowing the status quo to continue despite the vote — EU leaders today have taken a hard-line stance with the UK, urging the country to move forward with Article 50 “as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty.”
Uncertainty. That is the word of the day. In terms of direct impact on the film and TV business, the short-term consequences are:
A devalued pound. That is bad news for British distributors buying films in dollars or euros because their money won’t go as far now that it is worth less. On the (kind of) upside, the dollar and euro now will go further against the pound, making filming in the UK cheaper in the short term. Also, for producers who have sold or pre-sold their film in contracts measured in dollars or euros and are shooting in the UK, they will get more pounds back.
Less EU funding. UK productions almost certainly will stop receiving funds from EU arts programs such as the Media program, which gave British films such as Ken Loach’s Palme d’Or winner I, Daniel Blake more than $44 million in 2014 and 2015.
EU quotas. It is possible that UK productions, whether film or TV, will be less eligible for the quota system for European content that is the backbone of so much European production. That impact might also be felt on the likes of Netflix and Amazon, which recently were instructed by the European Commission to adhere to Europe-wide quotas on European content. There does appear to be uncertainty — that word again — on whether British films will be European-qualifying once the EU divorce is complete. Swiss films, for example, are considered European even though Switzerland is not part of the European Union.
Access to European co-productions. Once the UK is officially outside the EU, it is likely that producers won’t be able to access quite so easily the plethora of European co-productions that make up the tapestry of so much of the indie international film and TV biz. Some Chinese film execs already have come out in public to say a key plank of the UK-Chinese co-production treaty had been the ensuing European classification those films would have and the ensuing subsidies and distribution grants on offer across the EU. That said, bilateral treaties the UK has with European countries such as France and Germany should remain relatively unaffected as they are not necessarily contingent on the UK’s relationship with the EU.
The digital single market. The UK is unlikely to be a voice in the discussions over the EU’s mooted digital single market, the attempt to create essentially a borderless world for IP to travel across the continent so that a viewer in the Netherlands can see a film bought by a German distributor or broadcast by a French TV channel without geo-blocking. This idea already has proven hugely controversial with European producers, who have argued that the implementation of the DSM will destroy the indie film financing model (e.g. territorial sales and licences) that have existed for decades.