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Spending cut back and higher “rainy day” funds to guard against Brexit effect
Whatever the outcome of any Brexit negotiations, Gibraltar’s business community is “cautiously confident” that the jurisdiction will continue to prosper – provided there is free movement of goods and people at the Spanish border
Stock Exchange. A quarter of those firms ‘passport’ their
services into other EU jurisdictions and have a total of 1,048 passporting arrangements in place, of which 39 are for an established branch office elsewhere in the EU. There are also 34 top-flight eGaming licensees, employing 3,500 people.
A massive 96% of Gibraltar’s electorate voted overwhelmingly to remain in the European Union in the UK 23 June referendum, but as Fabian Picardo, the jurisdiction’s Chief Minister noted, with 72% of the UK’s 46.5m people voting “our contribution did not even move the needle”.
Capitalise on positives
The resulting vote to leave the EU has caused Gibraltar’s government to seek a solution that could ensure continued freedom of movement of people, services and capital throughout the EU, all of which are presently on the back of the UK’s EU membership.
Picardo emphasised: “The British Government are deeply aware of that and of the fact that it falls on them to help us mitigate the negative impact of leaving Europe as we also focus on capitalising on the positives that will also emerge.” He told Gibraltar’s Parliament that written assurances had been received to involve the territory in negotiations with the EU.
Jersey, Guernsey and the Isle of Man did not vote in the referendum, Gibraltar noted, but they have access to the Single Market via the UK, “offering a model of success based on different degrees of access to the EU”, prompting Picardo to make contact.
At the same time, he is exploring the possibility with Scotland’s First Minister, Nicola Sturgeon, of staying in the single market if the UK leaves, given that both jurisdictions voted to remain in the EU. There will be uncertainty, “but of course, there will be benefits”, Picardo pointed out. “That means that we don’t have to apply again for access, we simply remain with the access we have today, and those parts that leave are then given a different sort of access, which is negotiated”, outside of EU Article 50, which needs to be triggered to start the 2-year exit process.
There is in any event, political and legal uncertainty within the UK on whether and
how to enact Article 50, but Picardo believes that means “everything is to play for”.
Isola told Parliament in his early July budget contribution that “until we understand the direction of travel, it will not be possible to plan with any degree of certainty”, but that did not mean standing still.
The Gibraltar Betting and Gaming Association (GBGA) said: “At the moment and for the foreseeable future there is no change to the existing legal and political framework that our operators work within.” European countries already had widely different regulatory regimes and many required eGaming companies to have local licences – “the impact on our members is therefore likely to be minimal”.
With supportive government and regulators and “access to a wealth of human talent and experience in online betting and gaming”, the GBGA remarked: “The UK and EU political crisis makes us keenly aware why Gibraltar remains a great place to do European and international trade.“ Significantly, the EU website states that there are no EU-specific gambling laws.
Isola revealed that a major review to update Gibraltar’s gaming laws by the year- end is to be widened to also embrace taxes, duty and fee levels. “The international multiplicity of licensing, regulation and taxation of operators is an escalating burden for them”, Isola said, and whilst remaining committed to the highest standards of consumer protection, “the industry cannot compete and thrive if every jurisdiction it touches treats it as some form of cash cow”.
Building more and higher
Picardo, making his 5th budget speech in July, declared that a number of projects “to allow for gaming and financial services workers to be housed in Gibraltar on new ‘key worker housing’ terms have been proposed to the Government and are under active consideration”. But he warned: “Our community needs to understand that we need to build more and build higher in order to house those that we need to have in Gibraltar if we are going to maintain our standard of living for future generations.”
In part, the Chief Minister had in mind Gibraltar’s vulnerability to the potential for
Continued overleaf
British Foreign Secretary, Phillip Hammond with Gibraltar's Chief Minister, Fabian Picardo in May
As Chamber of Commerce (GCC) president Christian Hernandez declared: “I don’t necessarily agree with the doom and gloom messages that Brexit [Britain leaving the EU] would be the end of Gibraltar. There are many other territories around the world that operate successful economies outside the EU and there is no reason why Gibraltar could not do so”.
In the meantime, it was “business as usual” to market the jurisdiction, Hernandez said, whilst pointing out: "Gibraltar has the advantage of being a small jurisdiction so we can adapt to change much more quickly than larger economies and we have to use that to our advantage.”
A rush of solidarity statements from key players in Gibraltar’s financial services and eGaming sectors emphasising the commitment of those businesses - accounting for near-50% of the jurisdiction’s economy - to remain based in the territory and for some, even expand.
The minister responsible for both major business sectors, Albert Isola, described the ‘leave’ result as “terrifying” presenting a “cocktail of uncertainty”, but also “an opportunity”.
The territory has 480 regulated financial services entities and intermediaries operating in 12 sectors, including insurance, funds, trust and company service providers, consumer credit and mortgage providers, occupational pension schemes, as well as the Gibraltar
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Gibraltar International
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