business
A threat for employment and the economy
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UK and Gibraltar vote to leave the EU, hen it comes to the Brexit government in June, three days after the any immediate threat would be put on debate, one of the biggest referendum. In those circumstances, my threats to Gibraltar is the view is that such a government is more hold during the two-year period, or longer, uncertainty surrounding likely to work with Gibraltar, if only to wherein the UK Government will have to negotiate her relationship, and ours, with the future of local business and make it easy for the thousands of the EU. ‘During that time, all EU laws and employment. Having basked in “The biggest cross-border workers.’ The slightly rights will continue to apply to Gibraltar.’ In the glory of a high employment unnerving alternative scenario could issue for rate, an envious reputation for see a PP and Ciudadanos coalition, the run up to the referendum, an incredibly the UK is transparency and meeting all and based on previous actions and pro EU Minister Costa tells me that a huge the free amount of work is being carried out by necessary directives for financial comments made by these Spanish movement the Government of Gibraltar ‘behind the services, taxation and business parties, movement through the fronin general, the outcome of June’s of people.” tier could be made ‘an almost impos- scenes’, some of it, in conjunction with Her Majesty’s Government in the UK. referendum could cause issues sibility’. Minister Costa tells me that for our thriving economy. In an effort to in this worst-case scenario, outline the issues in layman’s terms and the local Government would “The reality is The Single Market help me to understand how much a vote have to reconsider from where that it would to leave the EU could affect us, Minister to source labour for certain With a constant flow of reports and take time to with responsibility for Business and Emsectors of the economy. We evaluations on Brexit being shot out reposition our of the media cannon and bombarding ployment, Neil Costa, explains ‘I think the reflect on the move that was economy...” first point to make is that, how employpreviously made, following the masses, one of the front running ment opportunities, or lack thereof, will the frontier closure, to draw in discussions follows the UK’s position develop in Gibraltar, will, to an important workers from North Africa to help maintain within the ‘Single Market,’ a term that extent, depend on the actions of the Span- the economy. ‘Gibraltar does have form in wasn’t necessarily widely known before ish Government. Let’s take the scenario of being able to deal with the circumstance Brexit took over the news. The Single Mara coalition of left leaning parties forming a of a closed border.’ In any case, should the ket seeks to guarantee the movement of GIBRALTAR MAGAZINE JUNE 2016
the club will have serious social, economic, and to achieve the level of prosperity we security and political consequences. Moreenjoy today. The trade between Gibraltar over, in the event of Brexit, the UK will no and the UK would stay, so there is some longer form part of the European Council degree of comfort, howsoever slight.’ He and will negotiate her withdrawal agreebelieves the biggest hit could be dealt to ment with the EU Council and Commission the tourism industry, with frontier probfrom outside, in the cold. In my lems turning day-trippers off the view, such a situation is political Movement idea of visiting the Rock. Another madness.’ On another note, significant blow could be dealt to through the Gibraltar is fortunate to receive the financial service providers and frontier could gaming companies that are based the amount of EU funding that be made is does. Over the past 16 years in Gibraltar and provide services Gibraltar has received almost 60 ‘an almost to EU members other than the impossibility.’ UK. ‘Depending on the agreement million euros. 3,615 jobs have been created or safeguarded struck between the UK and EU, as a result of EU funds, 5,000 qualificathere could be loss of access to the Single tions gained and 75 public sector projects, Market and border difficulties. Further, as well as 202 private sector projects. even if the UK achieves satisfactory Without a doubt, the receipt of this EU access to the Single Market, the UK Prime funding has been of tremendous benefit to Minister could no longer pick up the phone our economy, businesses and employees.’ and demand that the EU Commission take In the case of Brexit, ‘perish the thought’, action against Spain for her breach of EU we would find ourselves without these laws.’ Ultimately though, Costa reminds me structural funds. that until we know the outcome of both the referendum and the Spanish elections, our future is impossible to predict. Not all doom and gloom It’s not all doom and gloom though; Costa reflects back on the closure of the Dockyard in 1984, which at the time was Gibraltar’s most prominent asset. ‘Here we are today, many years later, an affluent, prosperous and safe nation. Let me make no bones of the fact that it would take many years to reposition our economy
Funding ‘The Swiss model is based on a series of bilateral agreements with the EU; over 100 individual agreements. Even then, Switzerland only has partial access to the Single Market for certain professional service providers. Switzerland has no general access in financial services; and yet, services make up 80% of the UK economy. If service providers based in the United Kingdom cannot access the Single Market, then it is safe to assume that those companies will have to seriously consider whether to leave the UK.’ Costa thinks that it will be extremely difficult to achieve a satisfactory alternative to EU membership, ‘not least because the remaining EU member states are hardly going to reward the UK, after having left the EU, with a good deal. The EU will wish to make the point that leaving GIBRALTAR MAGAZINE JUNE 2016
Any immediate threat would be put on hold during the minimum change over period of two years.
© Anthony Williams at Infinity-Photography
RISKY BUSINESS
goods, capital, services and people. ‘We all know that the reason why gaming companies and other financial and professional services providers are based in Gibraltar is due to their ability to sell their services to the consumers in the EU market, which comprises over 500 million people. Think of it this way: with the UK within the EU Single Market, the EU forms the biggest economy, as a measure of GDP, in the world. A Gibraltar business can therefore consider the EU as their market in which to do business.’ I probe the Minister on the importance of the Single Market and whether, as many have suggested, an alternative model could be implemented to allow the UK to continue trading within it. Reflecting on a UK Government document titled Alternatives to Membership, Costa divulges to me exactly how and why two differing models allow Switzerland and Norway, both of which fall outside the EU, to trade within it. One of the fundamental principles of the market is allowing the free movement of people, which is one of the bigger issues for the pro Brexit movers and shakers who are adamant that the UK should curb immigration. ‘I’m staggeringly oversimplifying these models,’ he notes, ‘but let me try to succinctly explain. Norway contributes to the EU budget and abides by 75% of EU rules over which it has no say. From press reports, it seems that one of the biggest issues for the UK is immigration but the UK does not form part of the Schengen area and she has achieved an exemption from proposed penalties for EU countries that do not take in a set quota of refugees determined by the Commission. As a member of the club, the UK has been able to shape their membership of the EU in a way that best suits them, I would argue, on all fronts. Let’s not forget, that Margaret Thatcher achieved a budget rebate for the UK.’