The UK Creative Industries: Navigating Headwinds, Charting a Course for Growth
- Dr Bidit Dey
- Jun 10
- 8 min read
Executive Summary
Sectors that harness individual creativity, skills, and talents to deliver entertainment, educational, and societal value are categorized as creative industries. While different nations have their own specific terminology and regulatory frameworks for these sectors, the UK classifies them collectively as creative industries. Over the past decade, this sector has experienced remarkable growth, outpacing overall economic development. The UK boasts a strong historical foundation for nurturing these industries, many of which are globally acclaimed and hold unique positions in their fields. High-end television productions, video games, and museums, for example, are prominent leaders in their respective domains. Despite challenges such as Brexit, the pandemic, and the cost-of-living crisis, these sectors have demonstrated resilience and continued to expand. However, much of this success has primarily been achieved by large organizations, while smaller entities face significant financial hardships and operational constraints. Many small and medium-sized creative businesses are led by self-employed entrepreneurs located in smaller towns and regions. It is crucial to support their growth, as this not only contributes to regional economies but also helps to preserve and enhance the nation's distinct and esteemed cultural and creative heritage. Strategic policy interventions, including tax relief, loan provisions, and short- to medium-term support for utility costs and operational challenges, could prove particularly beneficial in this context.
1.0 Introduction
In the United Kingdom, the creative industries are characterized as sectors that arise from individual creativity, skill, and talent, with the potential to generate substantial entertainment, educational and societal value. The UK Government's Department for Culture, Media and Sport (DCMS) emphasizes that the foundational capabilities of these industries are rooted in the development and use of intellectual property. This sector is diverse, comprising a wide range of sub-sectors, with key areas including performing arts, design, film, and music. However, the terminology and classifications used to define these industries can vary from one country to another. Despite notable overlaps and shared core principles, the definitions and terms associated with the creative industries differ internationally. This concept has been adopted and adapted by various nations and international organizations, leading to variations in scope and emphasis.
UNESCO often employs the broad term "cultural and creative industries." Their definition encompasses the sectors involved in the creation, production, and commercialization of intangible cultural products. This dynamic category not only includes art and design but also vital fields such as architecture and advertising. While these terms are frequently used interchangeably, they carry nuanced differences. In Europe, these industries are often referred to as "cultural industries," with a primary focus on preserving heritage and traditional arts, celebrating time-honored practices that resonate through generations. In contrast, the "creative industries" refer to a broader range of contemporary fields that thrive on digital innovation and technological advancements.
Delving deeper, the concept of the "creative economy" emphasizes how creative industries can harness creativity across various sectors of the economy. As a result, the creative economy has the potential to broaden the scope and reach of creative industries. In the context of Latin America and the Caribbean, the Inter-American Development Bank (IDB) has introduced the term "Orange Economy," which refers to the interconnected activities that foster and enhance innovative ideas, transforming them into cultural goods and services. The value of these offerings is intricately tied to the realm of intellectual property.
In the United States, the NAICS code serves as a vital tool for classifying creative industries, while across the Atlantic in Europe, the NACE code fulfills a similar role, shaping the landscape of creativity and innovation. As a result, nations around the globe have developed their own unique frameworks for defining and categorizing these dynamic sectors, leading to a rich diversity in how creative industries are measured and analyzed. Each country tailors its definitions to reflect its specific economic ambitions, deep-rooted cultural heritage, and the statistical resources at its disposal. Some nations may prioritize quantifying the economic contributions and job creation that stem from creativity, while others emphasize the preservation of cultural identity, the social ripples of artistic expression, or the innovative forces that foster societal advancement. This nuanced approach underscores the multifaceted nature of creativity and its significance in shaping the world.
2.0 Creative industries in the UK
This article examines the creative industries in the UK, which have experienced remarkable growth over the past decade. From 2010 to 2023, the Gross Value Added (GVA) of the creative industries increased by 35% in real terms, compared to a 22% growth in the overall UK economy. During this period, the expansion of the creative sector has clearly outpaced that of the broader economy. In 2022 alone, these dynamic industries contributed an impressive £124.6 billion in GVA, representing a significant 5.7% of the UK's total GVA. This figure is 50.3% higher than in 2010 and 12.2% above pre-pandemic levels, highlighting the considerable growth potential of the sector, which employs approximately 2.4 million individuals. The sector experienced a remarkable surge, with a 6.8% increase in GVA from 2021 to 2022, according to the latest insights from the Department for Culture, Media and Sport (DCMS). This thriving creative landscape not only demonstrates economic resilience but also underscores the limitless potential of artistry and innovation flourishing throughout the nation.
3.0 Geographic distributions and internationalization of the UK creative industries
Figure 2 illustrates the geographic distribution of creative and cultural industries throughout the UK. Greater London and the South East of England showcase a high concentration of these businesses, while Scotland and Wales are less represented. In contrast, the other regions of England demonstrate a healthy spread of creative industries. The disproportionate geographic concentration of advanced television, film, and video game studios likely accounts for the divide between England and the other devolved nations.
The UK's creative industries maintain robust international connections. Many of the larger enterprises are either operated by multinational corporations or engage in overseas collaborations and activities. Figure 2 illustrates the share of exports and imports within the creative sector. The impact of Brexit on the UK's creative industries has been substantial, particularly regarding exports to Europe, affecting various aspects such as logistics, costs, talent mobility, and funding. While some sectors and larger companies have adapted to these changes, smaller organizations and independent creative professionals have experienced the most adverse effects.
Among different sub-sectors, design, film and television, and interactive leisure software have particularly shown strong growth. It is estimated that the sector as a whole may experience 25% growth in 2025, making a substantial £132 billion contribution to GVA.
In Figure 1, we delve into a comparative analysis spotlighting the dynamic growth trajectories of various sub-sectors from 2019 to 2022. The pandemic cast shadows over numerous industries, notably theater, film, orchestras, and museums, disrupting their usual rhythms. In striking contrast, the video game industry and high-end television flourished amidst the turmoil.
"High-end TV" encompasses productions that boast substantial budgets, cinematic production values, and ambitious storytelling—a blend that aspires to rival the prestige and emotional resonance of feature films. The pandemic sparked a remarkable surge in demand for high-end TV content, solidifying the UK's status as a powerhouse in high-end TV production on the global stage. This surge not only attracted significant investments but also birthed some of the most critically acclaimed series hailed worldwide, showcasing the artistic prowess emanating from the UK.
The UK is home to state-of-the-art studio facilities such as Pinewood, Shepperton, and Warner Bros. Leavesden, which facilitated the growth of high-end TV production. Additionally, the UK government has played a pivotal role in nurturing this sub-sector through strategic and supportive policies. Among these is the enticing AVEC (Audio Visual Expenditure Credit) tax incentive, which offers a cash rebate of up to 34%.
The UK boasts a rich legacy in video game development. Notable studios such as Ultimate Play the Game (which later became Rare) and Imagine Software have made significant contributions to this sector. Additionally, the industry has benefited from government tax incentives and access to modern facilities, including state-of-the-art studios.
The circumstances surrounding museums in the UK are somewhat intricate. Although visitor numbers have increased by 3.4%, they remain approximately 9% lower than they were before the pandemic. Larger museums in London have performed relatively well, largely due to a rise in international tourists. In contrast, smaller museums located in towns and rural areas seem to be facing significant challenges. The specifics of these difficulties are explored in the following section.
4.0 Challenges
As noted in the previous section, the overall state of the UK creative industries presents a mixed picture. Certain sub-sectors are outperforming others due to their business models aligning more closely with current circumstances. Additionally, there are geographic disparities within individual sub-sectors. Reports indicate that 70% of creative businesses face financial difficulties, and 62% believe that insufficient financial support hinders their ability to achieve desired growth. The industry is predominantly comprised of small and medium-sized organizations, with 28% operated by self-employed individuals, which underscores the vulnerability of their business structures. The post-pandemic and post-cost of living crisis environment has significantly impacted smaller organizations, with rising utility bills, increased tax and national insurance contributions, and fluctuating customer demands. Many museums have had to reduce their operating hours and cut staff in response to escalating operational costs, consequently limiting their growth potential. As previously mentioned, Brexit has had a severe impact on the UK creative industries by restricting business interactions with EU member states. This creates significant challenges and increased expenses for international touring, a vital source of income and artistic exchange, especially for smaller and mid-sized orchestras. Musicians' unions and industry organizations are actively advocating for the removal of these barriers.
5.0 Policy implications
A variety of sub-sectors have reaped the benefits of strategic government support, as previously highlighted. Targeted tax incentives have emerged as a powerful catalyst for the flourishing high-end television and gaming industries, fueling innovation and creativity. Additionally, there are several funding regimes which support talents for creative industries. The UK Games Fund plays a vital role in fostering talent by sponsoring exciting challenge-based competitions for students and recent graduates, while also offering grants that empower emerging game studios and their prototypes to thrive. On another front, the UK Global Screen Fund serves as a valuable ally for film, television, animation, and video game companies, enabling them to forge and strengthen international partnerships. This support not only enhances their creative endeavors but also boosts sales through dedicated assistance for development, production, and distribution, paving the way for a vibrant and interconnected global marketplace. Similar funding opportunities ought to be expanded to benefit wider number of organizations and indidviduals, while continuing to encourage the development of creative talents.
There is a pressing need for an increase in long-term, stable public funding specifically allocated to museums, galleries, and performing arts organizations, particularly those located outside of London. Such support is vital for enabling these institutions to manage escalating operational costs and effectively recover their visitor numbers. This objective could be accomplished by enhancing central government grants and encouraging local authorities to prioritize cultural expenditures. Smaller organizations often encounter substantial financial challenges; however, there are various financial incentives available to assist them in navigating short- to medium-term difficulties. Effective strategies may encompass tax relief, support with utility expenses, and the provision of soft loans.
Dr Bidit L. Dey Associate Professor in Marketing
Sheffield University Management School (the University of Sheffield), UK
LinkedIn: Bidit Dey | LinkedIn
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