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Fears of a backlash against 'made in the UK' emerge post-Brexit

Pedestrians walk past British Union flag designs on advertisements for sales discounts
Simon Dawson | Bloomberg | Getty Images
Pedestrians walk past British Union flag designs on advertisements for sales discounts

Software consulting business Casewise has been based in London for 26 years, and has no plans to relocate, Brexit or no.

But CEO Alexandre Wentzo realizes that the company's British homebase could become a problem. He fears that there will be a boycott of "Made in UK" goods by European Union (EU) citizens, similar to Americans boycotting French goods when France did not join the U.S. in the 2003 invasion of Iraq.

"Many European countries have a strong national approach in the fact they made the Union," Wentzo said. "They take it very personally if you don't believe in this decision."

Like many hypothetical implications of Brexit, it's unclear whether a "Made in U.K." backlash will actually happen. But there's no doubt it's a concern.

"Even that uncertainty in and of itself has implications," said Sonal Pandya, association professor of politics at the University of Virginia. "It's an important question to start thinking about now."

A previous study led by Pandya and fellow University of Virginia business professor Rajkumar Venkatesan showed that country-based brand marketing can have an impact on sales during times of international conflict.

The study, which was published in March in The Review of Economics and Statistics, compared U.S. supermarket sales of French-sounding products in 2002 and 2003. Products that subjects had deemed "highly French" saw a 0.4 percent decline in store market share during the week of March 16, one of the pivotal moments of the dispute. In total, the researchers estimated French-sounding items lost about $43 million in sales that week alone.

Enders Analysis senior analyst Toby Syfret pointed out that U.K. leaving the EU is not exactly the same as France not supporting the U.S.' decision. For that matter, anti-EU sentiment is also a political factor in other member countries. In addition, consumers may see a benefit in buying British, especially with the weakened pound.

It's that not entirely that everyone in the EU is unsympathetic to Britain leaving the EU, Syfret said. "In the end, people do deals where people think it's in their interest."

But boycotts are not Casewise's only headache. Losing access to the European Union means it could have a smaller potential market.

"Through the U.K. we could address a market of 500 million [before Brexit]," Wentzo explained. "Now we're back to 60 million."

Marian Salzman, CEO of Havas PR, brought up similar concerns about marketing communications. To have access to a bigger E.U. market, it would make sense to move headquarters from London to Dublin, Ireland or another member country. Or, if the official language of the EU changes from English, it may make sense to relocate to a country that natively speaks that language.

"You can be the European coordinator, but if you can't walk through the fast track lines it doesn't make any sense," she said.

PHD Media Worldwide global CEO Mike Cooper countered that because European advertising has been run out of London for so long, the U.K. has a bigger talent pool for this industry than any other market. It would be a lot to ask for some of the world's largest media firms to pack up and leave. English is still the universal European language, he added.

"The U.K. is unquestionably the most sophisticated media market in Europe," he said.

Still, Enders Analysis has already projected a "dismal" impact on the U.K. media sector. Enders' Syfret said especially if the U.K. enters a recession, there will be a reciprocal effect in advertising. Enders is now allowing for a bigger downside, but Syfret admits it's going to be at least two years until the implications of the Brexit situation really hits.