In the 1960s, four young Liverpudlians helped ward off a British balance of payments crisis. The Beatles, who at that point were taking in $650 a second at 2014 prices during a 1965 US tour, helped to provide the foreign currency necessary for the UK to pay foreign creditors and buy the raw materials essential to keep the rest of the economy going. Without these kinds of “invisible” earnings, the UK current account would have been in constant deficit throughout the 1960s.
Today, as Britain once again faces the potential for a dramatic and sudden change in its trading relationships with the rest of the world, creative industries are again helping to provide ballast for the economy. Official figures show that the film and TV industry is the fastest growing part of the economy, helping to offset weakness.
Overall the motion picture, television and music industry has grown by 43 per cent since the start of 2016, compared with 6 per cent in the service sector as a whole. This success is prompting business investment: Sky, the paid-for-TV provider, is building a new set of studios in Elstree, north London, the home of the British film industry where Star Wars and Indiana Jones were filmed, as well as the first European “talkie” Alfred Hitchcock’s Blackmail.
New studios are proliferating, often funded by local government. His Dark Materials, currently showing on the BBC and HBO, was the first production to be shot at Wolf Studio Wales in Cardiff. Belfast Harbour Studios is expanding, as is Titanic Studios, also in the Northern Irish capital, where Game of Thrones was shot. Liverpool, in England’s north-west, is planning a “Pinewood of the North” in the former headquarters of mail order company Littlewoods. In Scotland the government has financed the development of Pentland Studios near Edinburgh.
Partly, the recent success of film and television is due to tax credits introduced in 2007 and extended by the former chancellor George Osborne in 2012. Productions that operate in the UK can claim back a rebate on their spending. Yet the growth also reflects the hunger of the entertainment giants for content: British studios and production companies are well-placed to hoover up commissions as American viewers still associate British accents with history and quality.
Yet there is a risk here too. Few think the current boom in high quality television is sustainable. Netflix, Amazon, Apple and Disney are committing billions of dollars in a “spend-to-win” competition. Some analysts compare the streaming wars to a “gold rush” and wonder who will survive in what may be an oversaturated market: potentially leaving local governments with empty studios once the music stops.
Overall there are more reasons for optimism. There has been a step-change in what viewers expect from television that could keep high quality skills and studio space in demand. The sector is also less exposed to Brexit than many others. It is hard to levy a tariff on a Spotify stream or YouTube video; neither does making them depend on importing vast quantities of components for just-in-time manufacturing; songs and films are not so easily substituted for one another.
Creative industries still face headwinds from a hard Brexit. Some have warned of the importance of freedom of movement. Ending it would make it harder for British bands, especially smaller ones, to tour Europe. Production companies praise the fact they can put equipment in a van and begin filming on the continent: The Beatles may have earned a fortune in America but it was in Hamburg that they first honed their skills and gained a following.
