About a third of PR businesses have warned the Brexit deal is likely to have a negative impact on their revenues this year, new research has found.
In a poll of 188 PR professionals, 33.5 per cent predict revenue declines this year due to Brexit. A similar proportion said they are less likely to hire talent from Europe.
Although it is too early to understand the full impact of leaving the European Union, the study provides an indication that a third of the PR professionals have a negative view of the Brexit deal and how it will affect business.
An Oxford Economics report predicts Brexit’s impact could result in a fall in GDP of between 0.1 per cent and 3.9 per cent, while economists at Citigroup estimate the UK economy will produce two per cent to 2.5 per cent less in 2021 than if the UK had extended ties with the EU.
Not all doom and gloom
Not all businesses in the communications sector will be negatively affected.
Brendon Craigie, the co-founder and managing partner of Tyto PR, told PRWeek his agency had experienced a positive impact, growing revenues and its team by about 50 per cent year on year.
He puts this down to Tyto’s pan-European model, where it operates without a headquarters and has a multinational European team working across borders.
Craigie also said the UK’s stock as a gateway to Europe has diminished.
“Our primary client base is international technology businesses entering Europe, so we’re a pretty good barometer for how the external world views Europe post-Brexit. In the past 12 months while Brexit has been in progress, we've identified three main shifts,” he said.
“First, whereas previously the UK would always be the gateway for new entrants to the European market, we're now seeing Germany emerge on par as the primary entry point. Historically, Germany would almost always be the secondary priority after the UK, then followed by France, the Netherlands, Spain and Italy.
“Second, we’ve seen clients proactively ask to have multinational teams lead their account in Europe, as opposed to the traditional approach of having a UK-led European approach. In our mind, this is because the UK no longer has the same authority to lead.
“This is one of the softer impacts of Brexit in terms of the UK's perceived influence and leadership in the region.”
Mark Pinsent, managing director of The Hoffman Agency Europe, has also noticed a trend for UK-based clients to “explicitly tell us that they're keen to be positioned as European companies rather than UK”.
“That can be tricky if they're headquartered in the UK [or] don't have a significant presence on mainland Europe,” he said. “It'll be interesting to see whether, over time, the UK becomes less of a priority market for international businesses looking to market in Europe… certainly for UK-founded start-ups, I could see it accelerating their need to have EU-based businesses.”
Another impact, according to Craigie, has been diminishing PR budgets, although this has more to do with COVID-19. This has provided agencies like Tyto with the opportunity to serve larger clients, as businesses “trade down from large and mid-sized multinational” firms.
Cognito’s EMEA managing director, Sebastian Mathews, told PRWeek that opportunities presented by the COVID-19 crisis in content, digital marketing and reputation “far outweigh” any downside from the Brexit deal.
“And, as such, we’re budgeting again for similar revenue growth in 2021,” he added.