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Editorial Comment
Hazards ahead if Brexit prevails
The impact is unclear on any decision by the UK – and therefore, through association, Gibraltar – to leave the EU after so many years, but it’s pretty certain that financial services will survive.
Gibraltar’s report on the likely effect and possible options for the jurisdiction will not be revealed until later this year. A referendum on Brexit could be as early as June and definitely before end 2017. In or out of the EU, Gibraltar expects to keep growing, even if using a different marketing tack.
However, financial services providers will be well placed if any new trade agreements are required for continued access, because the jurisdiction has wisely transcribed into law, and implemented, all EU Directives – and they continue to do so. The EU concern to protect consumers against any potential financial failure is shared by Gibraltar; our report in this issue illustrates how the insurance sector has worked to meet new Solvency II capital and risk assessment requirements.
Jersey, Guernsey and the Isle of Man - all outside of the EU – are working to negotiate access to the single market and to protect their economies by at least meeting the Directives, and helps show that it can be done.
In eGaming, despite grand EU principles of open access across borders, there continue to be artificial barriers, or additional licencing requirements, that have dogged Gibraltar’s market-leading gaming companies and prevented them from achieving their full potential, so Brexit is unlikely to have much impact.
Less certain, is the extent to which Gibraltar will be able to maintain its planned meteoric economic progress; while most governments are predicting low single figure growth this decade, Chief Minister Fabian Picardo sees Gross Domestic Product (GDP) 33% higher by 2020 – by the end of his second term of office! Much of the impetus is construction-led – a confidence to build new homes and offices – but as yet unproven, is the extent of significant inward investment bringing new businesses and employment.
Marketing the jurisdiction beyond the UK has had limited success in financial services, despite beefed-up resources and marketing funds, although a positive sign is the continued rise in the insurance sector with several new license applications pending. Nevertheless, the current year’s budget anticipates personal and company tax revenue unchanged at £232.5m.
The government sees its border with Spain as a major Brexit hazard, but air travel also may be vulnerable. Until a decade ago in the event of bad weather in Gibraltar, flights originating or destined for The Rock could not enter Spanish air space, nor land at Malaga, without first diverting to Tangier, to being reclassified as services from Morocco!
Today Gibraltar is protected by EU rules from Spain’s renewed efforts to exclude the jurisdiction from international flight agreements and Spain’s current general election turmoil with the possibility of a first coalition government, is unlikely to see good relations with Gibraltar a high priority.
Looking to 2025 Picardo says: “Make no mistake about the fact that we will have to continue repositioning ourselves and further diversifying our economy. Ray Spencer
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© 2016 Gibraltar International Publications Ltd.
4 Gibraltar International www.gibraltarinternational.com
Contents
News p6
Still ‘confident’ of strong economic growth, Brexit or not
Banking p8
Mind the gaps
Disruptive Technologies p10
Being Disruptive
Insurance p12
More insurers expected as higher capital levels kick in
Banking p16
Safer Banking
Feb/March/April 2016
Volume 22/ Number 1
Profile p18
Playing games helps build hotel tourism drive
Property p22
A robust and resilient property market!
Business p24
Gibrael - A new Bi-national Chamber of Commerce for Gibraltar
News p27
“Conservative estimate” sees £2.4bn GDP by 2020
Regulation p28
What will a new insolvency regime mean for Gibraltar?
Business round up p29