Brexit: A Momentous Decision for UK & EU
08 August, 2016
Predicting rough seas ahead but nevertheless confident on the UK event industry’s ability to weather the storm, Dave Crump, Creative Technology’s (CT) CEO, Europe & Middle East, discusses the fallout from Brexit.
A month and a half on from the Brexit bombshell and the shock waves have barely started to subside. In or out, leave or remain, no-one can deny that the fall out from this decision has taken everyone by surprise.
We were all warned about the economic impact; many chose not to believe what we were told and even more chose to ignore it on polling day. The political fall out, whilst not unexpected, was undoubtedly swifter and more dramatic than most would have predicted.
Now, the daggers have been put away, at least for the time being. We have a new Prime Minister, not elected by the people and not even elected by the party. However, at least there we have avoided many weeks of endless campaigning in a leadership election.
Our government can now turn its attention to how the Brexit process might actually work, as it is doubtful that much thought had been given it in the run-up to the referendum. How it works, if it works and I argue, IF it ever actually happens, are questions that will be answered in due course. I suspect there will be a lot more drama on that front before this crucial chapter in our history is fully played out.
For most in our industry so far it is business as usual. Many of us trade overseas and the larger contracts are agreed in advance, albeit not as far in advance as we would like. We are now more competitive and the revenues we are generating in the short term are higher due to the dramatic fall in the value of the pound. This positive, however, will be relatively short-lived for the majority of UK-based businesses as the costs of doing business abroad have increased equally dramatically. Unfortunately, the cost of the technology we buy will inevitably increase; the vast majority of this is manufactured overseas and priced in US dollars or euros.
At CT we have acted swiftly, accelerating planned capex to take advantage of effectively out-of-date sterling price lists. We are already feeling the impact on purchase of LED equipment from China, which is priced in US dollars and paid for at the point of delivery. We are fortunate that we have the cash and facilities to be able to act swiftly and we are earning a high proportion of our revenues in US dollars. Others will not be so lucky.
We are already hearing rumours of slow downs in the UK economy, only recently the star performer in Europe. This will affect our domestic market and the largely discretionary spend of corporate event organisers who are a key part of our client mix. Longer term – if the predictions of big corporate exodus from London and the UK are even partially true – this cannot fail to impact the event sector in the UK.
For years we have seen dramatic growth in mainland European exhibitions and trade shows and the gradual decline of the UK events. Our industry’s flagship PLASA is a case in point but many will remember the UK motor shows, boat shows and high end trade events being the dominant shows in Europe. With the possible exception of Farnborough, most have migrated across the Channel. I believe this is at least in part due to the Schengen Agreement and the free movement of people, especially from outside Europe within its land border – Brexit can only increase this pressure.
British companies have, however, dominated the event staging business for as long as it has existed and provided we are smart, recognise the changes and act accordingly, I have no doubt we will continue to to drive the most dramatic, innovative and exciting events worldwide.
There are some stormy seas ahead but those that are well equipped and well prepared will survive and most likely emerge stronger and better for the experience. We certainly expect CT to be one of the them.