TMBW - Wealth Management, Investment and Retirement Planning

WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING 14 February 2019

We do this by offering advice and guidance, lobbying and promoting sector needs as well as administering and developing incentives and schemes for the benefit of family businesses.

Dr. Nadine Lia

THE FAMILY BUSINESS OFFICE

Helping Family Businesses Survive and Strive DR. NADINE LIA

Historically family businesses have been the drive and backbone behind any countries financial system and have proven to be some of the most robust dynamic sectors of the economy. They are the backbone to the economy generating millions of turnover and their existence provides stability to the economy in a way that no other enterprise can.

Unfortunately at the same time they are exposed to their vulnerabilities and it has been these same vulnerabilities that have

served as the common factor into the decline or death of family businesses. One of the key factors is that after years in operation and practise, when it comes to facilitating the transfer many businesses were faced with either a legislative vacuum or else legislation that would render it not feasible to continue with the transfer. The scope of this legislation is to tackle these difficulties and find sound, practical and responsible ways in paving a way ahead.

Family businesses are of various sizes,

which expose them to different difficulties and problems. While most family businesses are SMEs, family businesses can be small, medium-sized or large, listed or unlisted. Family businesses have been widely equated to SMEs, neglecting the fact that there are also very large multinational corporations in certain member states that are also family businesses.

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WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

A moral obligation to make a difference

Voluntary Solidarity Fund Can you explain the concept behind the Voluntary Solidarity Fund?

“The concept first started when I was working on a Paper for a conference to be held in the Vatican.

The subject was the increasing inequality in income evident in advanced economies, which leads to a build-up of tension between those earning more and those struggling to earn anything at all. The International Monetary Fund (IMF) has also clearly indicated that this is a problem, which prompts my question: what can the individual do?

The concept of the VSF is that the individual participates in voluntary contributions to the fund, through financial or different talents, to counter socio-economic decay and help people struggling to participate in society and avoid falling behind once more.”

Where are the funds coming from and how will you be distributing them?

We will encourage people to contribute. In the paper I prepared I, indicated that those earning above €100,000 a year would be encouraged to give, say, one per cent a year. Those earning less would obviously give less, but those earning €200,000 would, of course, be encouraged to give more. There are many means by which the funds can be distributed: such as through working with charities, or lending people funds to set up their own businesses. There are many different routes that we can provide to help these individuals get back on their feet and contribute to society once more. As individuals, we need to take the issue of socio-economic decay into our own hands. For example, people coming out of prison need not only immediate support but also support and help to get back on feet again in society.

What makes VSF different from charities such as the Malta Community Chest Fund and Caritas?

VSF is not a charity, as such, but more about focusing on the moral obligation to help, and this is what we are trying to tap into. Charities are sometimes associated with the concept of ‘emergency aid’, but VSF is trying to go beyond this concept so that, with the help and talent of others, we can help people to become more independent.

Caritas and the Malta Community Chest Fund mostly provide help at the first level of support, whereas the VSF is interested in moving to the next level: giving individuals the means and opportunities so they are able to take care of themselves and stand on their own two feet. We do not want to compete with other charities but our aim is that we will encourage other people to contribute more: I feel that there is a gap in the

There are many different routes that we can provide to help these individuals get back on their feet and contribute to society once more.

Photo: Alenka Falzon

The Voluntary Solidarity Fund (VSF) has been established by the Archdiocese of Malta as part of an international network to help people who are at risk of falling behind but can be given assistance to help themselves back into a more productive and dignified life. The Archdiocese of Malta has already donated €5,000 but, talking to Giulia Magri, the chairman of the Fund, former Minister and Central Bank Governor PROFESSOR JOSEF BONNICI, says that individuals have a moral obligation to use and expand their talents to help others. He explained more about the VSF and the impact that economic growth has had on the Maltese Islands and its population.

support that can be provided.

So VSF will be helping individuals and also charities such as Caritas? So will people not feel that they do not need to donate to VSF as they are already donating to other charities? How will they distinguish between the two?

Again, this is not a traditional charity, as we are not providing the first line of support, but we provide the means for individuals to get back on their feet, to improve their capability to earn a living. Which gives rise to another question: are there enough organisations in society that do this?

Probably not – and I think we need to provide more resources for such funds and organisations.

Does this mean that people will donate less to other charities? I hope not, because providing the basic support is extremely important. But beyond that basic support is the need for knowledgeable intervention: a means to improve the individual’s situation. I believe that not enough is being done to help people who find themselves in certain situations (such as ex-prisoners or former drug-users) to participate in society and use their talents and capabilities. I certainly hope it does not reduce donations to charities, which is why we are approaching individuals and businesses, asking if they can help cater for a need that is probably not being given enough attention or resources.

You mentioned that VSF may also make loans for the setting-up of small businesses. Can you explain how this would work and how someone would become eligible for such funding?

This concept has brought about a bit of controversy and we must be careful that it is not abused. VSF can also provide micro loans through partner financial institutions for the establishment of small businesses.

This is for individuals who are usually stuck in a certain environment and do not have the funding to set up their own business, so we are there to give

help. We will provide them with interest-free funds and if the business is successful, we will expect the funds to be re-paid so that we can help others to set up their own business.

You speak about the imbalance found in advanced economies.

Where do you believe Malta stands as an advanced economy but also having a trend towards socio-economic decay?

Imbalance is not just found in Malta, as VSF is an international organisation, yet having a high level of economic activity results in a number of people benefitting from it, but does this mean that everyone is much better off. The issue of imbalance is complex and varies from one country to another. In Malta, for example, people dealing in property have definitely benefitted, unlike those who do not have property to sell or rent, but are struggling to maintain the increasing amount of rent that they have to pay.

In Malta we have a higher level of school drop-outs compared to the EU average, and many people who do not get any form of education will fall through the cracks of society – and then what happens to these people?

VSF can provide them with some kind of support or mentor them.

Of course there are numerous ways in which the government can help, but I do not believe that this is enough, which is why the Fund reflects on the Parable of the Talents: about using your money to help others, rather than hiding it in the ground to use for your own purposes.

When you were carrying out research in respect of setting up this fund, did you notice an age difference between those who suffer such socio-economic issues and those who do not?

Socio-economic issues affect all ages across the board. The younger generation might suffer if their parents are going through a separation and they are left in a more vulnerable state which could affect their future. People might be struggling to find a productive and satisfying job that not only provides for but also improves

their quality of life. It is also a question of knowledge: those with a higher level of knowledge earn higher wages and have better opportunities whereas those who do not have the means of obtaining such knowledge struggle to earn a living in society. We also find an issue where pensioners are concerned, in that most of them could make a more positive contribution to society if they were given the opportunity and this would also enhance their quality of life after retirement.

Speaking as an economist, what would you say would be the next step to reduce such inequality and growing tension in Malta?

Without any doubt, the backbone of an economy is the education system. Society and education have become more complex today and the individuals require a higher level of knowledge compared to just 20 years ago. There is no doubt that there is a link between those who are somehow falling behind in society and their level of knowledge and capacity to participate in society. Sometimes, these people also struggle to obtain the least qualified jobs as these are also becoming scarcer due to increased competition and the impact of globalisation. There must be support for those individuals to improve their lives and to give them the capacity to do so.

In the end, the whole country would benefit from a more productive workforce and would therefore contribute to the common good. When a person helps others, there is a sense of satisfaction and there are various ways of helping – directly or indirectly. We are currently facing a situation in which many people are struggling, despite the fact that there is the capacity to help and have a positive impact on the quality of life for future generations. Therefore, it is our moral obligation to use our talents to help one another for the benefit of a more sustainable economy and a better future.

WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

Malta’s proposition for UK Financial Services to be presented at London’s Guildhall Malta’s proposition for the UK’s financial services industry will be presented to industry professionals on Thursday, 21st February at London’s Guildhall.

The London-based event is aimed at highlighting the advantages and high level of services that the Maltese jurisdiction has to offer to UK companies seeking to relocate to other jurisdictions. The event will kick off with a couple of keynote speeches, followed by four focused panel discussions on Asset Management, Insurance, Private Wealth, and Blockchain. Each discussion will be held concurrently in separate rooms featuring a different panel for each topic.

Speaking about FinanceMalta’s participation in this event, Chairman Kenneth Farrugia said that, “the aim of our participation in this high-profile event is twofold. On one hand to network with leading UK and international stakeholders and on the other hand to promote Malta as a financial services centre of international repute.”

The Asset Management discussion will see the participation of Mark Caruana Scicluna from GANADO Advocates and Chris Portelli from EY Malta amongst others.

The Insurance panel discussion will be introduced by Romina Bonnici, from Mamo TCV with the participation of Ian-Edward Stafrace from MARM, Karl DeGiovanni, from AON and Malcolm Falzon from Camilleri Preziosi Advocates.

The private wealth panel discussion will be moderated by Tom Burroughs and introduced by Przemyslaw Koger from Alter Domus (Services) Malta Ltd together with Corrieri Cilia.

The fourth and final panel discussion on Blockchain will be moderated by Erhan Korhalliler and introduced by Gayk Ayvazyan from Chetcuti Cauchi. The panel discussion will see the participation of Stephen McCarthy, from MDIA, Joseph Portelli, from Malta Stock Exchange and Ian Gauci from GTG Advocates.

This morning event will come to an end with a reception, where the participants will have the opportunity to network with local industry professionals.

For more information on the event please go to: www.financemalta.org/events/ event/malta-propositionuk-financial-services-2019/

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WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

FAMILY BUSINESSES

Fiscal incentives, schemes and tax credits Continued from page 1 In some EU Member States a few family businesses account for a large share of the total turnover of all businesses and thus make a significant contribution to job retention, including in times of crisis, to creation and growth and to the economic success of the country concerned.

Crucially to date there was no legally binding, concrete, simple and harmonised European-wide definition of family businesses and equally a lack of policy decision-making which means that the needs of family businesses are not being met adequately by any member state.

Additionally, the imbalance of roles in family businesses is an Achilles heels to their sustainability.

The Family Business Office aims to assist on a daily basis all family business in Malta and Gozo in their better governance, growth, succession planning, transferring and restructuring. We do this by offering advice and guidance, lobbying and promoting sector needs as well as administering and developing incentives and schemes for the benefit of family businesses.

Below are the present incentives and schemes that family businesses can benefit from.

Fiscal incentives 1) For the exclusive period of 2019 parents transferring their family business to their children during this one year period will benefit from a reduced stamp duty of 5% to 1.5%.

2) Duty on immoveable property shall be chargeable on the first five hundred thousand euro (€500,000) of the value of the property transferred at the advantageous rate of three euro and fifty cents per one hundred euro or part thereof; 3) Duty on shares, interests in a partnership, trust or foundation no account shall be taken of the first one hundred and fifty thousand euro (€150,000) or such other greater amount as may be prescribed of the value of the shares, or interests in a partnership, trust or foundation transferred in assessing the duty chargeable.

Bank Finance Scheme Assistance via Bank of Valletta to acquire a loan up to a maximum value of €750,000 with the third party support of Malta Development Bank in order to facilitate the transfer and acquisition of a family business.

Tax Credits 1) Micro Investment of a maximum tax credit of €70,000 over a three year period; 2) Investment Aid – The Incentive Guidelines for Investment Aid 2014 – 2020 launched by Malta Enterprise in 2014 specify that in the case of acquisition of the assets of an establishment only the costs of buying the assets from third parties unrelated to the buyer shall be taken into consideration.

Governance incentives 1) Loan guarantees of up to €500,000 per business for the purpose of acquiring the business or parts thereof; 2) Legal, Notarial and Accountancy advisory services up to €12,500 over a five year period for the purposes of assistance in the succession or business transfer of a

family business; 4) Education and training for owners and their employees of up to €1,000 annually per family business; 5) Arbitration of up to five sittings with a value of € 2,500 with the objective to establish the fair value of the business; 6) Lease Renewal – The positive consideration of lease renewals occupying government premises; Conclusion With this innovative legislation and new support system being established by the Family Business Office we hope and intend

to bring recognition and support to this vital economic sector. Furthermore the Family Business Office will serve as a support to family business in the regulation of their business, their governance and enhancement of their internal organisation and structure with the aim of helping them to effectively operate their business and work towards a successful succession of the family business.

For further information please view www.familybusiness.org.mt or Facebook at Family Business Office Malta

WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

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WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

Three retirement savings myths debunked Retirement is often painted as a harbinger of doom, with naysayers sounding endless warnings that you will likely need to cut out all of life’s pleasures if you’re to survive your retirement years.

But the reality is that with careful planning, retirement shouldn’t be an event that signifies any changes in your financial behaviour. All that changes is that you don’t go to work – everything else should be taken care of.

A rule of thumb states that if you can live on 5 percent of your assets each year and if they are managed properly, your savings should last you forever. Put differently, if you multiply your annual expenses by 20 times, you will roughly know what capital you need to retire comfortably.

However, recent studies suggest that just 8% of people are saving enough to replace at least 75 percent of their final salary as their income in retirement – the goal-post for ensuring your financial security and comfort.

The most common themes underlying retirees’ lack of savings include saving too little, cashing in savings at resignation or retrenchment, investing too conservatively, and continuing to provide for children and parents.

But the biggest problem lies in the fact that, for many, the process of retirement planning does not begin early enough. In the era of instant messaging, Netflix, Uber Eats and mobile banking, we have come to expect instant gratification, with very little thought for the future.

Most concerningly, there are numerous fallacies about retirement savings floating around with the potential to cause irreparable harm to your investment outcomes, which urgently need to be addressed.

These include: 1. DIY-ing your investments will save you money In investing, diversification is everything. You may have a rudimentary or even expert knowledge of the stock markets for instance, but you also need to consider other asset classes in order to manage your investment risk. The only guarantee investors have is that the future will surprise. And what will happen then?

Next, consider that some countries represent just 1 percent of the investment universe, and while local companies have performed admirably, they are not Amazon,

Microsoft or Google – and that’s just equities.

As an investor, you need to seek professional advice on managing currency risks and diversification across different regions if you are to optimise your portfolio.

Furthermore, it is next to impossible to be objective about your own money. Emotion is perhaps the single greatest danger in investing, and attempting to manage your investments completely alone increases this risk exponentially. Then there’s the problem of making the time to tweak your investment portfolio on an ongoing basis as markets and global conditions change.

Ultimately, financial freedom does not mean needing to do everything yourself. Fees do cause a drag on investments, but over the longer term, you can’t afford to pay for specialist advice. Seek out a good, trustworthy advisor to walk your financial journey with you.

2. Longevity is your enemy Longevity risk, or the risk that you will outlive your money, has become a source of increasing concern. But living longer also means that you should be able to stay healthier and work for longer.

Also, consider that work as we know it is changing. Work is no longer a place –

technology is a great enabler for working remotely or from home, so rather than giving up all employment, many people are moving into a soft retirement and consulting instead.

Rather than longevity per se, the greater risk now is becoming redundant or obsolete.

In your forties and fifties you are generally at the top of your earnings potential, and thus at the peak of contributing to your retirement funds – making these some of the most important years for maximising your savings.

The base amount that you have built over the past few decades plus these heightened contributions and the power of compounding form a very powerful cocktail as you enter your pre-retirement phase, meaning that you could potentially triple the amount in your retirement fund.

Consequently, reskilling yourself is vital. Be prepared to continually learn and unlearn – the longer you are able to delay living off your assets the better.

3. You need to avoid debt It’s simply not realistic to expect people to avoid debt their entire lives. Everyone has had to deal with debt at some point in their lives, whether student loans, vehicle loans or mortgages. What’s more important is to

distinguish between long-term and shortterm debt.

If you are financing a long-term financial asset such as a house, this, in fact, represents an investment, as the value of your property should hopefully increase over time. Your greater concern when choosing to purchase a home should be managing your cash flow rather than the fact that you are taking on debt.

Be warier of short-term debt, which holds the potential to exponentially inflate your expenses over time and eat away at your wealth. Before buying on the budget, ask yourself why you are purchasing those items on credit. No one expects you to live like a pauper your entire life, but it’s worth considering whether you should instead delay spending until you have enough saved instead.

Manage your debt wisely, and use a budget planner if need be – the money that you save on interest repayments could substantially add to your wealth over time if invested instead.

However, when it comes to successfully managing your debt and cash flow, your best option is to partner with a professional financial advisor who can guide you along the financial planning process, help you to achieve your goals and ensure your financial security well into your golden years.

Calamatta Cuschieri appoints Head of Marketing and Communications Calamatta Cuschieri has announced the appointment of Franco Aloisio as Head of Marketing and Communications. This appointment was made in view of the company’s continued growth in the financial services sector in Malta and abroad.

Mr Aloisio, who joined the firm in October 2018, brings with him over 20 years’ experience in the area of marketing and corporate communications in various sectors such as financial services, telecommunications, insurance and journalism/ media. Prior to joining Calamatta Cuschieri, he was Head of Communications of HSBC Bank Malta plc and sat on the bank’s executive committee. Earlier in his career, he occupied the role of Head of Marketing and Communications of GO plc, and prior to that he worked in marketing, public relations, market research and media with various organisations.

In his role, Mr Aloisio is responsible for Calamatta Cuschieri Group’s marketing and communications strategy, and has been tasked with managing and strengthening Calamatta Cuschieri’s brand, products and services in line with the overall vision and strategic roadmap of the firm.

“We are proud to welcome Franco on our team. He

brings significant experience which will help us to continue to consolidate and grow the way we communicate our brand, with a view to retain Calamatta Cuschieri at the forefront of the financial services sector in Malta,” said Alan Cuschieri, CoCEO of Calamatta Cuschieri.

Calamatta Cuschieri is one of Malta’s largest financial services firm that pioneered the local financial services industry as early as 1972. The Group currently employs more than 160 people, and offers a wide range of services including Investment Advice, Live Online Trading, Life Insurance, Savings Plans, Pension Plans, Wealth Management, Software Development and Marketing services amongst others.

Calamatta Cuschieri is also the representative and main distributor for UBS Funds in Malta.

For more information please call on 25 688 688 or visit www.cc.com.mt Franco Aloisio, Calamatta Cuschieri’s Head of Marketing and Communications

WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

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Planning your Finances with BOV Investment Centres Most of us work hard to earn money, however, money is easily spent and when years roll by we may look back in horror at the amounts we spent, but had not saved. Whatever our goals, be they a more comfortable future, a strong investment portfolio, funds for dependants, long haul travel or retirement, long-term planning is a must.

Bank of Valletta offers different channels to assist customers plan throughout their life journey. Each customer touchpoint is geared towards catering for the different investment needs and life stages of customers. These touch-points include a vast Branch Network, Investment Centres and an exclusive Wealth Management arm.

At the start of our working lives, our expenses are generally higher than our savings. Through the BOV branches, customers may avail themselves of non-regulated advice and products that help them kick-start their savings and possibly a small investment portfolio. On the other hand, the Wealth Management arm, housed in the new BOV Premium Banking Centre, provides a holistic experience and exclusive services to customers holding high aggregate investible assets.

For customers who are beyond the preliminary investment services offered at branch level, but do not yet require the indepth services of Wealth Management, Bank of Valletta offers a network of Investment Centres, strategically located across Malta and Gozo.

The BOV Investment Centres have a team of professional Financial Advisors who support the investment goals of customers through the provision of tailored financial advice and long-term relationship management. These Centres offer comfortable and private premises ensuring that customers receive a superior customer experience.

BOV Investment Centres provide an ideal blend of specialisation, convenience and a personalised approach to meet customers’ needs and objectives. Customers retain their relationship with their branch, at the same time have the added value of specialised professionals who provide advice and monitor their investments. Bank of Valletta also offers customers the option to set up an appointment with their

Financial Advisor at their preferred branch in order to make this service accessible and convenient.

Financial Advisors are qualified to provide advisory services, have years of experience in the field of investments, are provided with continuous intensive training and supported by a strong research team within the Bank. The Bank also establishes key investment outlooks and opportunities at the micro economic sector level. These opportunities are relayed to the Financial Advisors to present to their customers.

Regular interactions are held as frequently as required by customers. Financial Advisors listen thoroughly to their customers and provide bespoke professional investment advice based on rigorous customer financial reviews, investment objectives, risk-profile and timeframes.

“Our Financial Advisors are fully trained and qualified, with regular training sessions and market updates held fortnightly, ensuring that they are up to date with the highly dynamic markets and product developments. BOV constantly invests in its people so that they are able to provide a tailored customer-driven service’”, said Ms Roberta Bellizzi, Senior Manager Investment Centres. “Financial planning is very important to ensure a comfortable future. The earlier we start thinking about investments, the better it is. It is also critical that customers meet regularly with their Financial Advisors so that any changes in their financial circumstances and objectives are reflected in their long-term financial planning.”

Through its Investment Centres, BOV provides customers with broad accessibility to investment services coupled with a high degree of professionalism. By means of regular surveys, BOV constantly listens to and monitors its customers’ feedback enabling these Centres to remain relevant to everchanging customer needs whilst providing the pinnacle of customer experience. In a recent customer satisfaction survey, customers rated the service provided by the BOV Investment Centres with 9.6 out of 10. This is a further testament to the superior customer experience and personal attention that our BOV Financial Advisors provide to their customers.

Customers who would like to discuss their financial planning requirements or to set up an appointment with one of our professional Financial Advisors, are invited to contact the Branch or Investment Centre of their choice or the BOV Customer Service Centre on 21312020 or customercare@bov.com. Bank of Valletta’s Investment Centres are found at Bir-id-Deheb, Mosta, Gzira, Qormi, Valletta and Victoria-Gozo.

The value of investments may go down as well as up and may be affected by changes in currency exchange rates.

Issued by Bank of Valletta p.l.c., 58, Triq San Żakkarija, il-Belt Valletta VLT 1130. Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).

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WEALTH MANAGEMENT, INVESTMENT AND RETIREMENT PLANNING

Fears grow: 1/3 of UK firms consider move abroad over Brexit JILL LAWLESS DANICA KIRKA Associated Press Nearly a third of U.K. firms may shift their operations abroad because of Britain’s looming departure from the European Union, a survey of 1,200 company directors suggested Friday, as the political stalemate over a Brexit deal heightened jitters among businesses.

The survey by the Institute of Directors, an employers’ group, found that 16 percent of

businesses already had relocation plans while a further 13 percent were “actively considering” a move.

The group said while headlines have focused on big companies, less notice has been given to smaller U.K. businesses and their plans to relocate.

Institute interim director Edwin Morgan said smaller firms typically have tighter resources and for them “to be thinking about such a costly course of action makes clear the precarious position they are in.”

Britain is due to leave the EU on March 29, but a Brexit divorce agreement struck between British

Prime Minister Theresa May’s government and the bloc late last year as been rejected by Britain’s Parliament.

U.K. lawmakers voted this week to send May back to Brussels to seek changes to the divorce agreement. But the EU is adamant that the deal cannot be renegotiated, leaving Britain lurching toward a cliff-edge “nodeal” departure from the bloc that many businesses fear will cause economic chaos.

A survey of companies released Friday showed that manufacturing firms stockpiled goods at a record rate in January to prepare for potential Brexit disruption to

trade.

The survey of about 600 U.K. manufacturers by the market research company Markit and the Chartered Institute of Procurement and Supply found that inventories of finished goods rose sharply, while optimism in the sector was at a 30-month low and jobs were starting to be cut.

Senior government ministers have suggested that Britain may have to seek a delay to Brexit to make time to find a solution.

International Trade Secretary Liam Fox said Friday the government was “still aiming to get to the 29th March — that’s the date we promised the British

people.” But he suggested there could be “a short delay” if Britain and the EU “had reached an agreement and needed the legislation to implement it.”

A delay would need the approval of the 27 remaining EU states.

Ireland’s Europe Minister, Helen McEntee, said the bloc would likely agree, as long as Britain had a good reason.

“There is no point in looking for an extension if we end up back to the same place in three months’ time,” she said. “We need to have a clear direction from the U.K. government as to what it is we want to achieve.”

The sticking point to a deal for many British lawmakers is a border measure known as the “backstop,” a safeguard mechanism that would keep the U.K. in a customs union with the EU to remove the need for checks along the border between the U.K.’s Northern Ireland and EU member Ireland after Brexit.

The border area was a flashpoint during decades of conflict in Northern Ireland that cost 3,700 lives. The free flow of people and goods across the near-invisible border today underpins both the local economy and Northern Ireland’s peace process.

Many pro-Brexit British lawmakers fear the backstop will trap Britain in regulatory lockstep with the EU, and say they won’t vote for May’s deal unless it is removed.

May has been sounding EU leaders out on potential changes, but Britain’s stance has caused exasperation among EU politicians, who point out that May signed up to the deal that she is now seeking to change.

“This was a deal that was negotiated with the U.K., by the U.K.,” McEntee said. “They weren’t bystanders in a separate room. There were discussions, negotiations. There were compromises on both sides.”

Diplomats have also warned that British attempts to reopen the agreement could trigger moves by EU nations to get concessions from the U.K. on issues including fishing rights and, particularly, Gibraltar.

Throughout divorce talks, Spain has stressed that it wants a say on the future of the disputed British territory at the tip of the Iberian peninsula.

Tensions over the territory flared again Friday, as Britain expressed irritation at an EU document describing the rocky outcrop as a British colony.

The phrase occurs in a document outlining the bloc’s intention to continue allowing British citizens visa-free travel for short stays even if the U.K. leaves the bloc without a deal. A footnote refers to Gibraltar, which was ceded to Britain in 1713 but is still claimed

by Spain, as “a colony of the British Crown” and says there is “controversy” over its sovereignty.

Spanish government spokeswoman Isabel Celaa noted Friday that Spain still claims sovereignty over Gibraltar.

But May’s Downing St. office said it was “completely unacceptable” to describe Gibraltar as a colony, calling it “a full part of the U.K. family.”