On 23 June, the British voted for the United Kingdom to leave the European Union. The leave result caused a ripple of concern throughout the economy, hitting the cultural sector particularly hard. In recent months, artists have been speaking out (See British Artists Speak Out About Brexit) about the disastrous effect that a British exit would have on cultural institutions.
Now, the art market is starting to follow suit. According to the annual TEFAF report, the United Kingdom is responsible for 19% of auction sales. How will the referendum result impact auction houses? And what about fairs like Frieze, which is held annually, in London? We already know that Brexit weighed on the June sales in London and that, given the political climate, many collectors were reticent about consigning big works to Sotheby’s and Christie’s.
The pound dropped over 10% after the referendum, hitting its lowest point since 1985. The crisis may very well impact on the contemporary art sales in London. However, some observers are still optimistic. Edward Dolman from Phillips told the press that a weak pound could in fact attract American and Asian buyers.
Uncertainty over import costs
The auction houses are extremely likely to be affected the U.K.’s exit from the E.U. At this stage, no one knows if taxes will be raised and whether importing and exporting artworks will become more complicated. Agnieszka Prendota of Arusha gallery told Artnet that Brexit will have a terrible impact on the circulation of works: “I think it will have a tremendous impact on the art market, the lead times and costs of importing works to and from non-EU countries can be detrimental to many exhibition plans, artists’ opportunities, and gallery growth.”
Will the market dry up?
In speaking to the New York Times, collector J. Tomilson Hill said that he also thinks that Brexit will cause supply to “dry up” and that there will be considerably fewer works for sale in the U.K., particularly in the Old Masters market.
Brexit could also “insulate England”, said dealer Dominique Lévy. In La Tribune, economist Michel Santi explained that big collectors could leave Great Britain and London could also lose its place as the European market leader.
Artists are also concerned that they will be left out by Brexit, since many receive funding from the European Union.
Auctions continue in London
We will have to wait several months, or years, to see the real impact that Brexit has on the ark market. There is still a lot of uncertainty over the financial details.
However, the auctions are proceeding in London despite the referendum result. Phillips, Christie’s and Sotheby’s have braved the storm and gone ahead with their contemporary art sales – under the watchful, and wary, eye of market specialists.