BETWEEN A ROCK AND HARD PLACE – BREXIT GIBRALTAR


The impact of the UK’s decision to leave the EU, despite Gibraltar’s overwhelming vote in favour to remain has sent shock waves around this territory.


If the UK leaves so does Gibraltar. By way of background; Gibraltar a British Overseas Territory is located on the southernmost tip of the Iberian Peninsula and overlooking the Strait of Gibraltar. Having joined the European Economic Community under the United Kingdom in 1973 it is part of the EU. Article 355(3) (ex Article 299(4)) applies the treaty to “the European territories for whose external relations a Member State is responsible”, a provision which in practice only applies to Gibraltar. As a separate jurisdiction to the UK, Gibraltar’s government and parliament are responsible for the transposition of EU law into local law. In 2016 Gibraltar voted remain in the UK EU membership referendum; however Gibraltar’s membership is not distinct from the UK’s and Gibraltar is bound by the overall result of leave. The voting population overwhelmingly supported Remain partly in fear of repercussions from its northern neighbour and its shared Schengen border (Gibraltar, like the UK is outside of the Schengen Area). Goods, services, workers and their livelihoods flow across the border on a daily basis. Gibraltar’s populous increases by just over 30% during the day, as cross frontier workers commute into and out of work, the impact of the UK’s decision to leave the EU has created uncertainty at the border.


Chart 1


Source: https://en.wikipedia.org/wiki/European_Union_(Referendum)_Act_2016_(Gibraltar) Remain a member


30,000 25,000 20,000 15,000 10,000 5,000 0


of the European Union European Union Leave the


Gibraltar’s economy has been built around its access to the EU Single Market. Insurance captives, MiFID (MiFID2) firms, AIFMs, banking and other investment businesses all operate under the same EU directives as other EU member nations, with those directives transposed into Gibraltar law, this facilitates the passporting of financial services across the EU. The principle questions now within the industry are; will there be an acceptable 3rd party equivalence for the passporting of financial services between the UK and the EU? Will that equivalence apply to Gibraltar? And what is the future relationship between the UK and Gibraltar? Gibraltar’s Finance Centre Director James Tipping told a European Parliament committee in May that the finance industry in Gibraltar is essential to the economy of the Rock. The industry was resigned to a loss of access to the EU single market but had been given firm assurances that Gibraltar would have greater access to UK markets which will bring opportunities.


The finance sector has always had strong ties with the UK, the majority of its finance business being linked to the UK. Following the referendum vote impact studies within the private sector have assessed customer and/ or counterparty jurisdictional importance with other EU members (ie. Trade Balances). These studies have highlighted the significance of services trade between the UK and Gibraltar, outweighing that of services trade between Gibraltar and all other EU nations. Over 20% of the UK car insurance market is underwritten from Gibraltar. The UK Government is in discussion with the Government of Gibraltar about approving access to the UK common market, partially mitigating the possibility of investment firms leaving Gibraltar. Interestingly over the past 18 months a reverse trend has arisen where investment businesses are enquiring about establishing themselves in Gibraltar as an access point to the UK and the City of London.


Registered voters and turnout


THE


FINANCE SECTOR HAS ALWAYS HAD


STRONG TIES WITH THE UK, THE MAJORITY OF ITS


FINANCE BUSINESS BEING


LINKED TO THE UK.


24,119


REGISTERED VOTERS AND TURNOUT


12 | ADMISI - The Ghost In The Machine | November/December 2017


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