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This is an audio transcript of the FT News Briefing podcast episode: Listener question — Should the UK cut arts funding?

Marc Filippino
Good morning from the Financial Times. Today is Monday, June 27th, and this is your FT News Briefing.

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Nato wants to better protect the Baltics against a Russian invasion. And we’ll take a look at how bad Brexit has hit the UK economy. Plus, a listener wants to know why the UK has slashed funding for the arts and whether it’s the right call.

Maria
Is this being short-sighted or is this economically justified?

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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As the war in Ukraine rages on, Nato wants to overhaul the way it approaches the Baltics. Estonia’s prime minister claims Nato was OK relinquishing the Baltics if Russia invaded and then sometime down the road, Nato would try and get the region back. Now, Nato said it never goes into detail about its operations, but its secretary-general, Jens Stoltenberg, told the FT that Nato has a new military blueprint when it comes to the Baltics. Henry Foy is here to tell me more about the strategy. Hi, Henry.

Henry Foy
Hey, Marc.

Marc Filippino
So Henry, you spoke to Stoltenberg. What exactly is the plan here?

Henry Foy
So the context here is that Stoltenberg heads to Madrid this week where he’s gonna be with the 30 other leaders of Nato and they’re going to effectively decide the next strategic approach for Nato for the next decade. But most importantly, they’re going to completely overhaul how they think the eastern part of Nato should be defended. So that’s the Baltic states, it’s Poland, Romania, all the countries that are bordering Russia or close to Russia. And the new strategy is we cannot rely on a few thousand troops in each of these states to be a deterrent, basically, and what they call a trip wire in case Russia does invade. But we need like solid large amounts of troops, pre-positioned equipment, and most importantly, that the big countries in Nato, the US, the UK, Canada, France, Germany, for them to have troops on standby all the time with pre-positioned knowledge of where they can go in the event of an invasion, so that if the Russians do invade, Nato commanders can send them there in a matter of hours.

Marc Filippino
Gotcha. So Henry, what does this mean more broadly for the war in Ukraine? And is it enough to stop Russia from invading the Baltics?

Henry Foy
So obviously, the biggest deterrent is that a few members of Nato, the US, UK and France are nuclear armed. So if Russia is gonna go to war with a Nato state, they have to be prepared that that could lead to a nuclear conflict. But the biggest thing here that people have learned from Ukraine is that the Russians did not invade slowly, slowly. They went full-bore. They went incredibly aggressively. And so that approach has really shifted the Nato mindset, which is we cannot allow territory to be taken and then try to recapture it, because if we did recapture it, it would just be a wasteland.

Marc Filippino
Henry Foy is the FT’s European diplomatic correspondent.

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It’s been hard to tell the difference between what Brexit has done to the UK economy versus what can be attributed to the Covid crisis. That’s because the deal went into effect just before the pandemic started, but now economists are starting to get some answers. The FT’s George Parker is here to break down what they found. Hi, George.

George Parker
Hi there.

Marc Filippino
So what are economists saying when it comes to the ripple effects that Brexit has had on the UK economy?

George Parker
There are two very distinct trends that are noticeable amongst others. One is the fact that Britain’s trade recovery hasn’t happened to the same extent of other G7 countries. And the other one is a very important measure, something that Boris Johnson’s always talking about, which is the level of private sector investments in the economy in the UK, which has been traditionally quite low, something they want to raise. And again, you can see private sector investment picking up in other countries, not doing so in the UK. Just one final stats is that the government’s own official forecasters say that Brexit will knock about 4 per cent of the UK’s GDP, I think over the next 15 years. In other words, we’ll be 4 per cent poorer than we otherwise would have been in 15 years time.

Marc Filippino
Now what do pro-Brexiters have to say about this, George?

George Parker
There have been other things which the government will say are benefits of Brexit, including the ability of the UK to strike trade deals with countries like New Zealand and Australia. And there are some reforms the city of London’s regulation that could be carried out. These are all things which could have an advantage to the British economy. But so far economists have struggled really to identify much of a Brexit uplift to the economy. But as I said, they’ve been detecting plenty of downsides. So what we’re left with is a lot of quite heroic rhetoric from Brexiters in the government about the advantages of Brexit without very much in the way of hard evidence to support it.

Marc Filippino
George Parker is the FT’s political editor.

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Now when it comes to how the UK spends its money, we want to take a look at one area in particular: arts programmes. The government has slashed budgets for arts programmes at universities by 50 per cent. The idea is to invest more in technical programmes that lead to higher earnings for students. The big thing is STEM programmes, science, technology, engineering and math. It’s a topic that’s near and dear to one of our listeners named Maria.

Maria
I kind of grew up with it, I guess. My parents, ever since I was really, really tiny, so ever since I can remember I’ve been going to art galleries. My mom always spoke about artists and the arts were very respected in my house. I took painting classes outside of school. Even the school I went to, we did a lot of theatre. The arts were quite important in the school as well. So then I think it really evolved from there.

Marc Filippino
Maria is getting a masters at the Royal College of Art and she wants to know, is cutting budgets for arts programmes a smart idea?

Maria
And I just want, I do want to understand, is this being short-sighted or is this economically justified? Because as far as I know, by the government’s own data, the creative industries do contribute as much as any other major industry to the UK economy. So I just, I don’t understand.

Marc Filippino
So is it economically justified for the UK government to slash arts funding for science and technology programmes? Basically, do STEM students after they graduate, earn more money and put more money back into the UK economy than art students? We put this question to FT business columnist John Gapper, who has looked into this debate. Hi, John.

John Gapper
Hi there.

Marc Filippino
So how big of a part of the UK economy is the creative industry and what’s included in that?

John Gapper
Well, it’s really pretty big, actually. If you know the German economy for engineering, the UK economy is, you know, had a bit of a reputation in the creative industries generally. And that ranges from everything from advertising, architecture, design, fashion, publishing, film, TV, video. It even includes on some counts IT and software. So it’s a really big sector. And on some counts, it accounts for like a hundred and sixteen billion of gross value added, which is pretty high up in the UK economy. So definitely not something to be messed with.

Marc Filippino
Now we should mention that the hundred and sixteen billion number was what those folks made before the pandemic. But anyway, it sounds like Maria’s hunch was right about that. John, what do earnings look like for students who graduate with arts degrees compared to STEM, which again, is science, technology, engineering and math?

John Gapper
Well, this is where things get a little more difficult. The Treasury has been looking at the numbers pretty, pretty carefully in terms of undergraduate bachelor’s degrees. The average return for somebody who’s a graduate in a technology subject can be around £500,000 in lifetime earnings. But some of the returns can be really low and, indeed, even negative for studying pure art subjects.

Marc Filippino
OK, so it sounds like there’s two sides to this coin. The creative industries, as we’ve talked about, they’ve made a lot of money pre-pandemic in the UK, but the people who actually work in those industries, there isn’t a tendency to make a lot of money. So with those two things in mind, can you answer Maria’s question? Is the decision economically justified to invest more money in STEM?

John Gapper
Well, I mean, I think that you have to look at this a little bit more closely because you got a lot of people in what are called the creative industries, advertising, marketing and so forth. They might not have a fine arts degree. They might have a liberal arts degree, architecture, history, philosophy, politics. And then secondly, there’s the question of whether or not it’s what matters to the country or what matters for individuals. I mean, for the individual, they may, for example, not really earn very much certainly early on in their careers, because, say, you come out of a university and you start as a lawyer, well, some law firms here are offering £125,000 a year as an entry salary. You’re not gonna get that if you’re a musician, but you might end up very successful over the long period because you’re taking a set of chances and you might be one of those people who really earns huge amounts of money. So firstly, it depends which way you measure it. And secondly, it kind of depends on how you count these industries. So I think for the government, it’s gonna make a very narrow economic calculation. For the individual, the way you look at it may be entirely different.

Marc Filippino
John Gapper is a business columnist for the FT. Thanks, John. And hopefully we answered Maria’s question.

John Gapper
Thank you. I hope so.

Marc Filippino
All right, so what did we learn here? We learned that the creative industry is a huge part of the British economy, but the people who work there don’t all have the fine arts degrees that are experiencing budget cuts. Now, if you look at economic returns in terms of graduate salaries for the first 10 years, fine arts degrees don’t actually have a good return on investment. But over their whole career, those graduates could potentially earn just as much money as people with other degrees. With all of this in mind, we reached back out to Maria to see if John had actually answered her question, is slashing funding for arts programmes economically justified?

Maria
Yeah, it just completely solidified what I thought. So I do think it’s short-sighted just because of what he was saying. So in a lifetime, someone with an arts degree can earn as much of someone with a STEM degree. And in order like the question of making less money when you graduate, I think it’s a personal decision. Also, it’s the importance that the government puts in an industry that is a major contributor to the economy. And yeah, I don’t think also the liberal arts degrees would be the, because they’re not the only ones working in those industries. Why discount the whole other part of people who usually are the creative minds working within those industries and pushing those industries forward?

Marc Filippino
All right. Well, thanks for your question, Maria. And I’m glad we were able to answer it.

Maria
Yeah. Thank you. Thank you so much.

Marc Filippino
All right. So now that we’ve answered Maria’s question, we want to hear from you. If you have a question that you’d like us to answer, reach out. You can find us on Twitter @ftnewsbriefing or shoot me an email marc.filippino@ft.com. By the way, we love it when you send your questions as voice memos. Give it a try.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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