Five Years Later: The Global Beneficiaries of a Weakened UK Economy

The UK's economy has endured a turbulent trajectory since its departure from the European Union in January 2020. Once hailed as a bastion of financial and cultural influence, in its 5 years out since exiting the EU, the nation has faced GDP stagnation, a declining currency, mass corporate exodus, a cost-of-living crisis, as well as rampant government instability. Brexit reformers promised a long list of economic benefits for the UK that in reality have only resulted in a wide array of unintended consequences. In 2023, the UK lost its number two position in the global art market to China, further widening the gap with the US. Meanwhile, the London Stock Exchange in 2024 saw 88 companies, many of them corporate giants, moving their listings to the New York Stock Exchange and NASDAQ, citing higher confidence, deeper investor pools and liquidity in US capital markets as well as more stable [government] policies[1].

The instability of the UK government up to this point has been the most significant factor in this economic decline. Since the beginning of the Brexit referendum, the UK has cycled through five prime ministers, starting with the resignation of David Cameron, who was against leaving the EU, but called for the vote. Theresa May resigned in 2019 after failing to secure consensus on a Brexit deal. Boris Johnson, who followed, resigned in 2022 amid scandal and negotiating lacklustre agreements. Liz Truss served only 49 days before resigning after her proposed mini-budget caused market turmoil. Rishi Sunak’s tenure has also been marked by significant challenges, leaving many corporations, wealthy families and investors wary of long-term stability in the UK. Competitor economies like the US, China and rising Middle Eastern countries, by comparison, have maintained stable governments in this period which has attracted the attention and movement of resources and talent of the UK.  

These challenges have not only reshaped the UK's standing on the world stage but also created opportunities for competing nations to exploit. Five years later, the ripple effects of a weakened UK economy have realigned power not only in the art market, but in several other industries that affect the art trade, including but not limited to finance, property, tech, and wider cultural industries[2]. This essay examines the global beneficiaries of the UK's decline and explores the resulting shifts; lastly it proposes simple strategies for art market entrepreneurs, collectors and cultural investors both inside and outside of the UK to leverage these changes to their advantage, relating to the art market. 

Asia’s Continued Ascent

As the UK’s 5-year plans have failed and metrics declined, Asia’s economic ascent has continued an upward trend. China, now the world’s second-largest art market, overtook the UK in 2023, claiming 19% of global market share. The country’s economic reopening in 2023 accelerated growth, with art market sales rising 9% to $12.2 billion. Hong Kong’s resilience as a financial and cultural hub further solidified its position, with auction houses such as Christie’s, Sotheby’s, and Phillips investing heavily in prestigious spaces and year-round exhibitions.

Beyond China, countries like Singapore and South Korea have emerged as direct beneficiaries of the UK’s decline. Singapore’s favourable tax policies and status as a financial safe haven have attracted wealth from global investors exiting the UK. Seoul has emerged as a new market thanks to Frieze, London's most prestigious art fair, diversifying their business into the city in 2022 which is the same year that Art Basel opened their Paris edition to compete with Frieze London in the month of October, a play to secure EU collectors who are no longer incentivised to import from the UK (as evidenced in the section below on Paris). In 2023, Frieze expanded its portfolio in the US by acquiring New York's Armoury Show and EXPO CHICAGO, the two longest running art fairs in the United States, making further large investments which diversify its portfolio outside of the UK. 

The sleeping giant that is India is officially a global player. India’s economy has expanded so rapidly in recent decades, the International Monetary Fund’s World Economic Outlook has projected it to become the third-largest economy in the world in less than five years, leapfrogging the U.K., Germany, and Japan, and right behind the U.S. and China. 

This year, India's art market has seen record sales, including Christie’s auction of a work by Francis Newton Souza for $4.9 million, seven times its pre-sale estimate. Guillaume Cerutti, CEO of Christie’s, emphasised the strategic importance of the region, particularly as Asia’s purchasing power continues to grow. Additionally, according to a year end report on Artsy, Indian artists saw a 32% increase in inquiries in 2024 (the highest of any other country), reflecting the country’s rapid economic ascent and its growing global influence in the art market. 

The Middle East’s Strategic Investments in Culture

Perhaps one of the greatest private equity beneficiaries, along with the US and China, has been countries in the Middle East, taking advantage of a low pound, acquiring UK assets at discounted rates compared to pre-Brexit. While the UK has experienced an economic downturn in initiating its leave from the EU, the Middle East has cemented its role as a critical global player in global finance and culture. 

Sovereign wealth funds from the UAE and Saudi Arabia have made multi-billions of investments, acquiring strategic property, equity and talent directly from the UK. Sotheby’s $1 billion injection from Abu Dhabi’s ADQ in 2024 is just one example. While the $1 Billion investment has helped Sotheby's grow its operations, many have speculated that Sotheby’s was in trouble due to its nearly $2B debt obligations and staff layoffs which was reported to be 100s of employees. The equity position that ADQ received is undisclosed but it certainly strengthens their cultural clout which also includes the Louvre, Guggenheim Abu Dhabi, Zayed National Museum and several other world class cultural institutions[3].

Saudi Arabia’s Vision 2030 initiative, spearheaded by Crown Prince Mohammed bin Salman, has transformed The Kingdom into what will be a cultural powerhouse in the near future. The Crown Prince MBS, who famously purchased Leonardo da Vinci’s "Salvator Mundi," from Christie’s in 2017 for $450 million (setting a record for the most expensive painting ever sold at public auction) has championed the development of new museums, galleries, and cultural initiatives all across the country. Christie’s became the first major auction house to obtain a commercial license in Saudi Arabia, followed by Sotheby’s announcing its inaugural auction in Riyadh for 2025. These moves highlight the Middle East’s growing influence on the future of the global art market.

The United States: A Safe Haven for Capital

The United States has been one of the biggest beneficiaries of the UK’s economic struggles. According to Dr. Clare McAndrew’s findings in the 2024 UBS Art Basel Global Art Market Survey, the US maintained its dominance in the art market, with a 42% market share and $27.2 billion in sales in 2023 and will easily maintain this position in 2024. With the UK’s markets in turmoil, the US attracted global consignments and commercial art interests seeking stability. American collectors’ insatiable demand in contemporary and modern art has further entrenched the US as the epicenter of the global art market.

Outside the art market, the London Stock Exchange has experienced one of its worst years since the financial crisis. The Financial Times reported, in 2024, 88 companies delisted from the exchange, many moving their primary listing to New York for bigger investors, more liquidity and stability. In the same FT report, the authors explain that major UK based corporations, including Darktrace and Hargreaves Lansdown, have agreed to be bought this year by private equity firms taking advantage of weaker pound and an unstable government. Darktrace, a UK cyber security company worth billions of pounds was bought by a US private equity firm as well as Hargreaves Lansdown, one of the biggest UK investment companies in the country, was bought by a consortium of private investors which includes the Abu Dhabi Investment Authority. Both companies will delist from the LSE and move into private hands. 

Paris: The EU’s New Number 1 Art Market

Paris was one of the fastest cities to capitalise on London’s challenges, attracting galleries and collectors that previously favored the UK. Hauser & Wirth, Mendes Wood DM, Esther Schipper and many other major galleries have opened spaces in the French capital since 2022. For EU-based collectors, it is now logistically and financially smoother, assuming like-for-like, to transact in Paris than in London whether buying at auction, art fair or a gallery. Today, France accounts for nearly 55% of all fine art sales within the EU making it the EU’s number 1 art market.

To understand the magnitude of that shift one must understand that the EU, combined as one free trade entity, is the 2nd largest economy in the world on par with China at $18 Trillion GDP[4]. Essentially, the UK cut off free trade and made it logistically harder to buy and sell with the 2nd largest consumer in the world. Brexit promised better trade deals and economic growth when leaving the EU, neither of which has materialised[5].

It’s no surprise that Art Basel quickly made a decision to open its Paris edition in 2022 which strategically challenged Frieze’s dominance of the October art fair calendar. While some collectors attend both fairs, many EU citizens at time of writing prioritize Paris due to logistical advantages and tax efficiencies over the UK. 

Lessons and Risks for Collectors

For collectors and investors outside of the UK, Brexit has presented incredible short-term advantages, during the initial Brexit period (5-years thus far). The pound’s decline allowed foreign currencies to stretch further, enabling acquisitions of UK assets at discounted prices. However, the UK’s 2024 tax reforms significantly impacted wealthy collectors, increasing inheritance and capital gains taxes within the country. These changes prompted an exodus of non-domiciled individuals[6], further weakening the UK’s position as a tax-friendly environment for art collecting and wealth management.

For serious collectors, the lesson is clear: diversification and due diligence are as essential as they always have been but even more so in dealing with new markets which have yet to mature. The days of relying solely on the top 3 traditional art market capitals to obtain the best opportunities are over. This change is excellent news for collectors as new art markets increase global competition and increased competition means more value and better service for collectors. To remain competitive amongst themselves, collectors must comprehend a global outlook, taking into consideration fluctuating currencies, government policy and secure transactions in emerging markets. Geographic diversification into regions like Asia and the Middle East can create opportunities but also demands an understanding of local tax policies, logistics, and political risks, in addition to all of the standard risks associated with acquiring works.

Trusts and foundations still offer a protective structure for high-value collections (even in the UK), but add complexity and administration which come with additional costs. Museums or lending programs can provide multiple advantages including tax, as well as cultural, while ensuring the collection’s longevity and prestige. Currency strategy is another critical factor: holding assets in multiple stable currencies mitigates risk from volatile exchange rates, while collectors in stronger markets may benefit from timing acquisitions in staggering currencies, as cited in the above examples in the UK from property, to equity and art. Security is equally important: assessing the infrastructure, risk profile and proximity to conflict, both geographically and politically, are all considerations of caring for a valuable art collection. 

Conclusion

Five years after Brexit, the global beneficiaries of the UK’s economic struggles have reshaped the world’s financial and cultural landscape. From Asia’s growing dominance in the art market to the Middle East’s strategic investments in UK assets and companies, to Paris’s rise as Europe’s cultural capital, the ripple effects are undeniable. Collectors, investors, and cultural institutions must navigate this evolving landscape with caution and foresight, embracing opportunities while mitigating risks. In an interconnected global economy, the rise and fall of one nation’s fortunes inevitably create new horizons for others. By leveraging geographic, financial, and strategic diversification, art market entrepreneurs, institutions and collectors can position themselves to thrive in this dynamic and expanding global market.

Notes

[1] In the essay, there are several economic data and discussion points that relate to industries and government policy outside of the art market but are included in the essay as underlying causes that affect the art market (ie the stock market). In the introduction, I give an example of mass corporate exodus from the LSE and will later explain how this has an affect on the wider UK economy and the art market. 

[2] There are many reports circulating that the art market has no or little correlation with the stock market (or other conventional asset classes). I believe that most of these studies are biased and flawed and that the performance art market is absolutely connected to the performance stock market. It’s worth noting that only the NYSE and NASDAQ trade the same volume as the entire global art market in about 45-60 minutes on a normal day of trading. Especially in today’s interconnected global economy, most luxury and collectable markets are connected to the stock market and other conventional markets. If we are looking at only Blue chip artists, then there are historical exceptions. 

[3] Abu Dhabi’s cultural strategy includes the development of Saadiyat Island, an impressive cultural district which includes Louvre Abu Dhabi, Berklee Abu Dhabi and Manarat Al Saadiyat, and the future home of Zayed National Museum, Guggenheim Abu Dhabi, Natural History Museum Abu Dhabi, and teamLab Phenomena Abu Dhabi. I have visited the Island on multiple occasions over the 5 years and the rapid growth of cultural development and investment is unmatched up to this point. 

[4] As of 2023, the European Union's GDP was approximately €17.1 trillion, which is roughly equivalent to $18.59 trillion, positioning it as the second-largest economy globally, slightly ahead of China's GDP of $17.79 trillion

[5] Analyses suggest that Brexit has had a dampening effect on the UK's economic growth. The Office for Budget Responsibility (OBR) estimates that the new trading arrangements could reduce long-run productivity by 4% compared to remaining in the EU.

[6]The term "non-doms" refers to non-domiciled individuals, a tax status in certain countries, particularly the United Kingdom. A non-dom is someone who resides in a country but declares their permanent home (domicile) to be in another country.

Works Cited

"Brexit Analysis." Office for Budget Responsibility, 1 May 2024, obr.uk/forecasts-in-depth/the-economy-forecast/brexit-analysis/. Accessed 3 Jan. 2025.

Cerutti, Guillaume. "Activity on LinkedIn." LinkedIn, www.linkedin.com/posts/activity-7277914323149099008-Qj6h. Accessed 12 Nov. 2024.

Department of Culture and Tourism – Abu Dhabi. "Saadiyat Cultural District Abu Dhabi." SCAD Abu Dhabi, scdabudhabi.ae/en. Accessed 12 Nov. 2024.

"GDP Growth (Annual %)." The World Bank, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2023&locations=GB-US-AE-CN-IN&start=2016. Accessed 3 Jan. 2025.

Kakar, Arun. "The Artsy Market Recap 2024." Artsy, 16 Dec. 2024, www.artsy.net/article/artsy-editorial-artsy-market-recap-2024. Accessed 12 Nov. 2024.

McGachey, Kristen, and Edin Imsirovic. "Goldman Sachs, Morgan Stanley, Linklaters Score Roles on £5.4bn Hargreaves Lansdown Takeover." Financial News, 9 Aug. 2024, www.fnlondon.com/articles/goldman-sachs-morgan-stanley-linklaters-score-roles-on-5-4bn-hargreaves-lansdown-takeover-1df4af3d. Accessed 3 Jan. 2025.

Staff Writer. "London Stock Exchange Suffers Biggest Exodus Since Financial Crisis." Financial Times, www.ft.com/content/aef053ce-c94d-4a72-8dce-bdbf56dd67e1. Accessed 12 Nov. 2024.

Tarmy, James. "Abu Dhabi Acquires Minority Stake in Sotheby's Auction House." Bloomberg, 30 Oct. 2024, www.bloomberg.com/news/articles/2024-10-30/abu-dhabi-acquires-minority-stake-in-sotheby-s-auction-house. Accessed 12 Nov. 2024.

UBS and Art Basel. "Art Market Report 2024." UBS, 13 Mar. 2024, www.ubs.com/global/en/media/display-page-ndp/en-20240313-art-market-report-2024.html. Accessed 12 Nov. 2024.

Uddin, Rafe, Marianna Giusti, and Ian Smith. "Flood of Stock Defections Leaves LSE on Track for Worst Year Since 2009." Financial Times, 15 Dec. 2024.

Appendix

Brexit Summary of Promises vs. Reality