Brexit

European Union flag

Brexit was the withdrawal of the United Kingdom from the European Union in January 2020 that affected Cloud Imperium Games in various ways.

Incertitudes over Brexit

CIG was taking advantage of the UK game tax credit incentive, without being sure if it would survive or would have to change if the UK exited the EU, in addition a large number of CIG workforce being European Nationals also lead to uncertainty until a plan was in place. CIG sources work and travel between the European Union a great deal, as well as sends and buys equipment. CIG also has the Frankfurt Office, therefore leaving the Union would make it more complicated for CIG to do business. Macro issues of what it will do to the UK and World economies, especially in the short term made CIG feel like staying in the EU was by far the less risky option for CIG / Foundry 42.

BASF deal

Due to the UK price structure and the government support, in 2016 Foundry 42 in Wilmslow had grown to become CIG biggest global hub, with CIG making a 10 year plan to expand its presence even further in the UK and house its growing team.

In 2018-2019 CIG was investigating an office move from the existing studio in Wilmslow to a larger space within the nearby area. CIG went into talks that lasted several months to buy the UK headquarters of the chemical company BASF for around £6m in Cheadle Hulme, Greater Manchester.

In september 2019 CIG decided that the space was not an ideal fit given the circumstances, including the continuing uncertainties introduced by Brexit, such as the impact on property and business values, as well as currency fluctuations and effect on CIG's ability to employ and maintain EU nationals, which are a substantial part of CIG workforce.

Two years later in november 2021 CIG announced the opening of a new studio in Manchester planned for May 2022.

Loan

CIG UK incurs a significant part of its expenditures in GBP while the collections are mostly in USD and EUR.

Foundry 42 is entitled to a Government Game tax credit rebate which is earned every month on the Squadron 42 development. These rebates are payable by the UK Government in the fall of the next following year when CIG file their tax returns.

Given the low interest rates at the time versus the then ongoing and uncertain currency fluctuations due to Brexit, to avoid converting unnecessarily other currencies into GBP, Foundry 42 and its parent company Cloud Imperium Games UK Ltd. took a regular advance against the tax rebate from the Coutts & Co. bank. As of october 2023, the loan hasn't been repayed.

Investment

As part of a $46M worldwide investment into the Cloud Imperium Group made in 2018, CIG UK raised £17m from a minority equity investment. This investment was to provide added security and additional funds to allow it to push the games to fruition and market them to a wider audience. In the Annual Companies House Report of 2019, CIG notes that the added security this brings gives additional comfort at a time when the economic and competitive environment is expected to remain challenging during the year ahead, particularly with uncertainties surrounding Brexit and related issues.

Post Brexit

CIG strategic report from the end of 2022 mentions that the economic risks associated with Covid and Brexit continued to decline and were now considered to be part of the ordinary course of business.

Workforce

The gaming industry as a whole has a multicultural and diverse workforce with a large percentage of games businesses claiming to rely on overseas expertise, with 35% of the UK game industry staff as a whole coming from the EU and 17% from beyond Europe.

Prior to Brexit, hiring an EU employee required minimal paperwork. Now, companies must sponsor each potential employee from the EU, apply for visas, and pay healthcare surcharges which previously existed only at a nominal level. Employers must prove that they have made a valid attempt to seek out applications from UK citizens. The delay created reduces the pool of applicants.

However the UK gaming industry remains attractive to workers.

Due to national post brexit rules, english language tests have to be taken by foreign workers, which has led to the hiring of Lénaïc Riédinger by CIG to be delayed by months.

Conversion rate

Following the fall of the pound exchange rate against other currencies, it was possible for players from outside the UK to elect to pay in Pounds in order to save money, paying up to 20% less depending on their own currency.