"A flag can't be racist" yes obviously true but there's more to it than that. Stone Island clothing wasn't created as a symbol of violence, but if I see some half cut geezer wearing Stone Island looking at me sideways, I know better than to engage. It's like the people who ask me (as I have a Pakistani name), why is the P word offensive as it's just short for Pakistani, or why is swastika offensive, it's just an ancient Hindu symbol. If those words and symbols were mainly used for those purposes then they wouldn't be.
Flags during sports events, on jubilees and other national celebrations, at state events etc were normal when I was growing up. Never bothered me, had an England flag during football tournaments as a kid, and my children had flags for Queen's jubilee. Random people in America with a US flag waving somewhere in their front yard, never bothered me as it's part of the culture.
But if my next door neighbour here started flying a flag randomly and putting it on lampposts and painting it on zebra crossings - I know from his other conversations that his motivation isn't just positive national pride and what the flag represents changes with how it's used. (He hasn't actually done this but supports it).
And yet we get on ok day to day, he's like "nothing against you mate, you're alright it's the others" and he'd be the first one to help me out if I need something, as people now seem to have almost infinite capacity to separate their actual interactions with real people from their prejudices about whole groups.
There is nothing inherently racist about a flag, but it can become representative of something if used often enough for it.