The Creative Industries Federation has warned of a ‘cultural catastrophe’ as research from Oxford Economics reveals that the UK’s creative industries are on the brink of devastation. The UK’s creative sector was previously growing at five times the rate of the wider economy, employing over 2 million people and contributing £111.7 billion (€125bn) to the economy – more than the automotive, aerospace, life sciences and oil and gas industries combined.

The report, The Projected Economic Impact of Covid-19 on the UK Creative Industries, projects that the creative sector will be hit twice as hard as the wider economy in 2020, with a projected GVA shortfall of £29 billion. Many creative sub sectors are expected to lose more than half their revenue and over half of their workforce. Despite the Job Retention Scheme, the report projects that 119,000 permanent creative workers will be made redundant by the end of the year. The impact on employment is set to be felt twice as hard by creative freelancers with 287,000 freelance roles expected to be terminated by the end of 2020.

Regionally, London is projected to experience the highest drop in creative industries GVA, seeing a £14.6 billion (25 per cent) shortfall. However, Scotland and the North East are expected to be hit hardest relatively, with projected GVA decreases of 39 per cent (£1.7 billion) and 37 per cent (£400 million) respectively. One in six (112,000) creative jobs could be lost in the capital, with the West Midlands expected to be most impacted in relative terms, with two in five creative jobs in the region projected to be lost. The North West and South West will also be hit hard, with both projected to lose around a third of creative jobs. This could represent a major setback to the levelling up agenda, particularly in light of research from Cambridge Econometrics, released by the PEC/Creative England this week, which suggests that, based on recovery from the 2008 recession, creative industries outside of London may take much longer to ‘bounce back’ than those in the capital.

Key statistics:

• Creative industries GVA projected to fall by £29 billion (-25 per cent), with the creative industries being hit twice as hard as the wider UK economy (OBR estimate for UK GDP growth this year is -12.8 per cent.)
• Creative industries projected to lose 406,000 jobs and £74 billion in revenue (-30 per cent).
• Music, performing and visual arts projected to lose £11 billion in revenue (-54 per cent) and 57 per cent of jobs (178,000) with theatres, recording studios and concert venues remaining closed.
• The music industry is projected to lose at least £3 billion in GVA (50 per cent) and 60 per cent of jobs (114,000), with the sector being hit hard by the collapse in live music and touring.
• Theatre projected to lose £3 billion in revenue (61 per cent) and 26 per cent of permanent jobs (12,000), although this estimate only takes into account current cancellations and does not account for the reluctance of audiences to return to venues (only 20 per cent would return on opening night according to a survey by Indigo). Further research from UK Theatre/SOLT shows that, without further intervention, job losses in theatre across permanent and freelance roles is likely to number over 200,000 (over 70 per cent).
• Film, TV, video, radio and photography could lose £36 billion in revenue (-57 per cent), with the sector projected to lose 42 per cent of jobs (102,000) as social distancing constraints affect cinema capacity and the cost of filmmaking. (The BFI reported last month that 65 per cent of film and high-end TV production had to be put on hold during the shutdown, although film and television production is now restarting following the introduction of extensive social distancing guidance.)
• Postproduction and VFX could lose £827 million in revenue (-58 per cent).
• Radio projected to lose £186 million in revenue (-21 per cent) as it sees a decline in advertising.
• Crafts could lose £513 million in revenue (53 per cent), with the craft economy projecting to lose 47 per cent of jobs (58,000) as many craft practitioners experience the fallout of closed workshops and retail spaces.
• Design and designer fashion within creative industries could lose £2 billion in revenue (-58 per cent) and 30 per cent of jobs (51,000). When we look at the reach of design across the economy, the risk is far greater, with a potential GVA drop of £37 billion (-47 per cent) and over 300,000 jobs projecting to be lost.
• Advertising and market research could see their turnover drop by £19 billion (-44 per cent) projecting job losses of 26 per cent (49,000), with spend on advertising expected to drop by £4 billion in 2020 (-17 per cent).
• Publishing could lose £7 billion in revenue (-40 per cent) and 26 per cent of jobs (51,000), affected by the closure of bookshops and decline of print sales.
• Museums and galleries could lose £743 million in revenue (-9 per cent) and 5 per cent of jobs (4,000), with the impact being mitigated by being able to reopen in July under social distancing constraints.
• Architecture projected to lose £1 billion in revenue (-24 per cent) and 2 per cent of jobs (1,800 jobs).

Regional breakdown:

• London is projected to lose 16 per cent of its creative jobs (109,800) and see a 25 per cent (£14.6 billion) drop in creative industries GVA whilst the South East is projected to lose 24 per cent of its creative jobs (82,000) and see a 25 per cent (£4.7 billion) drop in creative industries GVA. Of the 406,000 creative jobs expected to be lost, 47 per cent are projected to be in London and the South East.
• The East of England is projected to lose 25 per cent of its creative jobs (42,000) and see a 31 per cent drop (£1.9 billion) in creative industries GVA.
• Scotland is projected to see the largest percentage drop in creative industries GVA (39 per cent / £1.7 billion) and lose 6 per cent of its creative jobs (7,000), owing to a greater use of the furloughing scheme. However, the region is projected to be amongst the hardest hit once the Job Retention Scheme is withdrawn.
• The North West is projected to lose 30 per cent of its creative jobs (48,000) and see a 30 per cent (£1.4 billion) drop in creative industries GVA .
• The West Midlands is projected to be hit hardest in terms of job losses, with 43 per cent of creative jobs projected to be lost (51,000) and a creative industries GVA shortfall of 32 per cent (£1.4 billion).
• The South West is projected to lose 28 per cent of its creative jobs (43,000) and see a 29 per cent (£1.3 billion) drop in creative industries GVA.
• The East Midlands is projected to lose 1 per cent of its creative jobs (1,300) but see a 31 per cent (£800 million) drop in creative industries GVA, owing to a greater use of the furloughing scheme. However, the region is projected to be amongst the hardest hit once the Job Retention Scheme is withdrawn.
• The North East is projected to lose 3 per cent of its creative jobs (2,000) but see a 37 per cent (£400 million) drop in creative industries GVA, owing again to a greater use of the furloughing scheme. However, like the East Midlands, the region is projected to be hit harder once the Job Retention Scheme is withdrawn.
• Northern Ireland is projected to lose 20 per cent (6,000) of its creative jobs and see a 23 per cent (£300 million) drop in creative industries GVA.
• Wales is projected to lose 26 per cent (15,000) of its creative jobs and see a 10 per cent (£100 million) drop in creative industries GVA .
• Yorkshire is projected to see a 3 per cent (£100 million) drop in creative industries GVA.

The report follows the Creative Industries Federation’s open letter to government in April calling for urgent funding for the creative sector, which was signed by over 500 leading figures from the creative industries and beyond. In May, the Creative Industries Federation joined forces with UKHospitality and the Association of Leading Visitor Attractions to call for an extension of the Job Retention Scheme and Self Employed Income Support Scheme, as well as the introduction of targeted grant support for those sectors who will be last to return to work.

The Oxford Economics report, The Projected Economic Impact of Covid-19 on the UK Creative Industries, was commissioned by the Creative Industries Federation, in collaboration with the Advertising Association, AIM, Animation UK, Arts Council England, AudioUK, Bectu, BPI, British Fashion Council, BFI, Crafts Council, Design Council, Directors UK, Equity, Greater London Authority, GC Business Growth Hub, Liverpool City Region Combined Authority, Museums Association, Musicians Union, The Network of European Museum Organisations, Publishers Association and PPA, Radiocentre, RIBA, SOLT/UK Theatre, Ukie, UK Music, UK Screen Alliance, Welsh Government and West Midlands Combined Authority.

The analysis draws from responses to the Creative Industries Federation’s survey of over 2,000 creative organisations and freelancers on the projected impact of the Coronavirus pandemic on creative industries’ employment, income and freelance contracts (Coronavirus Creative Industries Impact Survey, Creative Industries Federation, March-April, 2020). These responses were complemented with Oxford Economics’ industry forecast to make assumptions on the quarterly profile of these developments. Where possible, data from individual trade bodies was employed to further inform these estimates. The results are based on the assumption that the Job Retention Scheme (furloughing) will be employed for as long as it is in place.

Caroline Norbury MBE, CEO, Creative Industries Federation, said: “With the economic impact of Covid-19 hitting hard, the role of our creative industries has never been more critical. As well as being a huge driver of economic growth in every part of the UK, our creative and cultural sectors bring communities together, they employ millions and are at the heart of our soft power. These are the industries of the future: highly innovative, resistant to automation and integral to both our cultural identity and the nation’s mental health. We’re about to need them more than ever.

Our creative industries have been one of the UK’s biggest success stories but what today’s report makes clear is that, without additional government support, we are heading for a cultural catastrophe. If nothing is done, thousands of world-leading creative businesses are set to close their doors, hundreds of thousands of jobs will be lost and billions will be lost to our economy. The repercussions would have a devastating and irreversible effect on our country.

We urgently need a Cultural Renewal Fund for those in the creative sector who will be hit hardest, including those industries who will be latest to return to work, those businesses unable to operate fully whilst maintaining social distancing and those creative professionals who continue to fall through the gaps of government support measures. We must also avoid a cliff-edge on vital measures such as the Job Retention Scheme and the Self Employed Income Support Scheme, which have been a financial lifeline for many parts of the creative industries and cannot be cut off overnight.

It is time to both imagine and engineer our future. We will need our creative industries to do that. They are too important to ignore.”

Julian Bird, Chief Executive, UK Theatre and Society of London Theatre (SOLT), said: “The UK’s theatre industry plays a key economic, social and place-making role. Theatre and the performing arts make a powerful contribution to our society and to our diverse national identity. They make areas richer culturally and financially, and they make places more attractive to live and work. UK Theatre is a global success with our productions filling cultural venues from Broadway to Beijing. However, the impact of COVID-19 on the theatre industry has been immediate and devastating; with every UK venue now closed. COVID-19 has removed the sector’s trading income entirely at a stroke and thrown its business model into crisis. In order to rescue the performing arts sector, we call on government to: sustain the workforce; catalyse the recovery; and review insurance and liability policies to ensure this valuable asset is protected and enhanced for the future. We hope this report goes some way to helping this happen.”

Belinda Budge, Vice-Chair, Creative England and Creative Industries Federation, said: “The UK’s creative sector brings joy to millions, plays a key role in maintaining the nation’s mental health and is also a huge driver of economic growth. However, the report today projects a catastrophe for our creative ecosystem, with sectors projected to lose around half of their revenue. Publishing could lose £7 billion in revenue (-40 per cent) and 26 per cent of jobs (51,000), affected by the closure of bookshops and decline of print sales. As we emerge from lockdown, we will need imagination and creativity more than ever. We will need those who can take specks of ideas and carve them into a vision for the future. But for that, we need our creative industries.”

Philippa Childs, Head of Bectu, said: “As the union for media and entertainment workers and freelancers the scale of devastation demonstrated in these figures is terrifying. People in the creative industries were some of the first to stop working and will be some of the last to return to work because of coronavirus. On top of that many of our members have fallen through the gaps of the government income support schemes and have already endured many months with no income coming in. The creativity that fuels this outstanding sector of the economy comes from people who have dedicated themselves to the film, theatre, TV, cinema and live events industries. They are the backbone of the success of this sector and any plans to implement a Cultural Renewal Fund must ensure that they are provided for.”

Andy Harrower, CEO, Directors UK, said: “It is vital that the Government offers meaningful support to the creative sector at this critical time. The films and television programmes directed by our members have kept the country entertained, informed and connected during lockdown. The majority of screen directors are freelancers and lost almost all of their work as the production industry ground to a halt. Many were unsupported due to gaps in the financial support available and a full return to work is likely to be slow and challenging as production adapts to safe working. UK television alone creates £3billion of revenue and £1.4billion in exports. Government intervention is needed now to support the industry and its workforce in getting back to work, and maintaining the UK’s global position as a centre of excellence for film and television production and creative talent.”

Neil Hatton, CEO, UK Screen Alliance, said: “Filming stopped in mid-February when Covid stuck, but Visual Effects and Post-Production continued to operate on work already in their pipelines. However, with no new work coming in, their hiatus will be delayed but will be just as deep and last for longer. The sudden and unexpected closure of the CJRS to previously unfurloughed employees from June 10th will be a critical blow to many companies whose hiatus is still to come. Rather than enabling flexible furlough, the new CJRS withdraws support just when it is needed.”

Tom Kiehl, Acting CEO, UK Music, said: “Year after year the UK music industry is a proven winner for our economy, job creation and exports, as well as positively impacting other sectors like tourism. Coronavirus has turned our world upside down, with catastrophic consequences across the industry and beyond. The music industry is resilient, but this means knowing when to ask for help. We need help to restart our economy, help to preserve jobs and help to maintain the UK’s fundamental position as a net exporter of music across the rest of the world.”

Ben Roberts, Chief Executive, BFI said: “Film and cinema stand shoulder to shoulder with our creative counterparts; we are all vital to the cultural fabric of our lives and our well-being, which we need more than ever. Our creative industries are huge contributors to the UK economy bringing in billions in international investment and providing thousands of jobs across the UK. Film and television production are now restarting and cinemas are hoping to reopen next month. However, there are still huge risks for independent filmmakers and for cinemas trying to make it through recovery and we are committed to supporting them through the ongoing challenges.”

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1. Analysis: SVoDs drive $220bn content spend
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3. European pay-radio: Getting ready

Categories: Articles, Business, Content, Funding, Markets, Policy, Production, Regulation, Research

Tags: Advertising Association, AIM, Animation UK, Arts Council England, AudioUK, Bectu, BFI, BPI, British Fashion Council, Crafts Council, Creative Industries Federation, Design Council, Directors UK, Equity, GC Business Growth Hub, Greater London Authority, Liverpool City Region Combined Authority, Museums Association, Musicians Union, Publishers Association and PPA, Radiocentre, RIBA, SOLT/UK Theatre, The Network of European Museum Organisations, UK Music, UK Screen Alliance, Ukie