Post-Brexit Art Market: Keep Calm, Carry On and Negotiate Hard

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Lot and his Daughters painted by Sir Peter Paul Rubens c.1613-14 sold for £40m at Christie’s, the centrepiece of Christie’s a week of sales in July branded Classic Week. It came for sale from the family of railway magnate Baron Maurice de Hirsch de Gereuth (1831-96) who acquired it from the Dukes of Marlborough.

The British art market, the second largest in the world, is putting on a brave face after the Brexit vote. No need to panic. Business as usual. Reasons for optimism. Precisely a fortnight after the June 23 referendum, the sound of applause echoing for a £40m Rubens at Christie’s was proof that it will take more than 17.1m ‘leavers’ to upset this apple cart.

Thriving on Economic Uncertainty

The art market can enjoy economic uncertainty. It’s often said that auctioneers prosper by the three Ds – death, debt and divorce. And Brexit has something of all three. Following the global recession of 2008, prices for many art and antiques hardened and gold, silver and gemstones spiked. Expect more of the same – particularly in the context of the weakening pound. The immediate impact of a Leave vote at London’s summer fairs was that visiting Americans were happy to make deals at £1 = $1.30 that would not have materialised at £1 = $1.50.

Establishing the UK’s Art Market Pre-eminence

The Brexiteers also argue that cutting formal ties with the European superstate could be a chance for the UK to enhance its status as an entrepôt for art and antiques. The UK is the region’s dominant art market player with sales of $13.5 billion translating to a 21% share of the global market (France accounts for 6% of global sales, Germany, 2% and Spain and Italy just 1% apiece). However, its pre-eminence has been threatened by New York, Hong Kong and Beijing. There are those in the trade who say the EU – and particularly three regulatory areas emanating from Brussels since 1993 – hasn’t helped.

In the wake of the Brexit vote, senior figures from British Art and Antiques Plc are calling for the repeal of the Artist’s Resale Right (ARR), a potential reduction in import VAT on art and a review of export licensing thresholds. Axe them all and the London market could be set fair. Keep them and optimism begins to fade.

It won’t be easy. ARR, entitling artists to a royalty each time one of their works is resold through an auction house or dealer, puts London at an immediate disadvantage to its key international competitors. Yet at its heart, it is an ideological discussion. It has as many adherents in the artist lobby as it does detractors in the art dealing community.

Abolishing import VAT is perhaps more realistic. Currently the wildly differing tariffs levied on works of art as they are brought into the EU have played into British hands. What costs 5% in the UK is 6% in France, 10% in Spain and a massive 22% in Italy.

The Challenge of Being Heard

However, leaving the single market and imposing that 5% tax on items coming from Europe too would surely be a barrier too far for dealers and auctioneers who rely on consignments from the continent. A post-Brexit government seeking to champion British success stories would surely understand?

This is doubtless the right time to lobby for concessions, and much will fall on the shoulders of the British Art Market Federation (BAMF), who represent dealers and auctioneers and lobbies on their behalf. However, with a new Prime Minister and a new-look government faced with four decades of European legislation to unpick, art market red tape will scarcely be priority number one.

Hope for the art and antiques trade lies in being part of the discussion. At this seismic moment in British political history, being heard may be the biggest challenge of all.

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About the Author:

Roland Arkell is the Contributing Editor at ATG Media. For almost two decades, Roland has been writing about the British and international art and antiques market for Antiques Trade Gazette, the leading publication for serious buyers and sellers of art and antiques.