The exit of the United Kingdom from the European Union, commonly known as Brexit, has had a profound impact on various regions and industries. Gibraltar has been significantly affected as a result. Being located at the southern tip of the Iberian Peninsula and a British overseas territory with the only land connection via Spain, the pressure on supplies of goods and movement of people has been horrendous. No wonder 97% of Gibraltar residents voted in favour to remain in the EU.
As businesses in Gibraltar navigate the changes brought about by Brexit, it’s crucial to comprehend both the challenges and opportunities that have emerged.
- Borders and Customs Changes
One of the immediate impacts of Brexit is the introduction of a tighter control of goods and services between Gibraltar and Spain, which was not present during the UK’s EU membership. This has led to adjustments in trade procedures and increased logistical challenges for businesses involved in cross-border activities. This has affected the supply of fresh produce in and out of Gibraltar as well as transport issues. It has also affected the movement of people with non-EU passport holders requiring stamps every time they cross the border in and out of Gibraltar.Gibraltar now operates under the framework of the UK-EU Trade and Cooperation Agreement. This agreement outlines the terms of trade in goods and services between the UK and the EU. While the agreement does not cover Gibraltar directly, its provisions significantly impact the territory’s economic activities, influencing trade and regulatory dynamics.
On the positive side, if an agreement with the EU and UK on behalf of Gibraltar can be reached, Gibraltar could well be the access point to the EU and Schengen
- Regulatory Changes:
Gibraltar’s businesses are no longer governed by EU regulations although Gibraltar still tries to adapt EU requirements to law if possible. Gibraltar is subject to a mixture of UK and Gibraltar regulations now. This has affected residency solutions in Gibraltar which were EU governed. Adapting to these changes involves understanding new compliance requirements and ensuring alignment with the evolving regulatory landscape.
- Financial Services ImpactGibraltar’s financial services sector is a substantial part of the revenue generated in the Gibraltar economy. The EU passporting rights that allowed seamless financial transactions with EU member states are no longer applicable which has affected businesses based in Gibraltar who transact in the European Union. Businesses have had to be proactive and set up offices in Portugal or Malta for example to allow them to continue passporting their services and advice.
- Employment Market Dynamics
Changes in the movement of people between Gibraltar and the EU impact the employment market. Companies are adapting to new visa and work permit requirements, affecting the recruitment and mobility of talent. Deciding to live in Spain or Gibraltar now has different implications from a visa and work perspective.
Opportunities Post-Brexit Era
- Market Diversification
Brexit has prompted businesses in Gibraltar to explore and diversify the market concentration. Whilst services and goods are no longer always available, Morocco and Gibraltar’s relationship seems to be building stronger as a new supply avenue. Seeking opportunities beyond the EU can open doors to new trade partnerships and revenue streams, potentially mitigating the challenges posed by the altered EU relationship.
- Digital Transformation
The need for streamlined and efficient processes in the post-Brexit era was accelerated during the COVID era and continues to grow with the adoption of digital technologies. Businesses are investing in digital transformation to enhance operational agility, reduce costs, and remain competitive on a global scale.
- Legal and Advisory Services Demand:
As businesses navigate the complexities of post-Brexit regulations, there is an increased demand for legal and advisory services. Firms specialising in providing guidance on compliance, trade, and regulatory matters find themselves in a position of importance. As a company management firm our knowledge is essential to assist individuals who wish to start a business in Gibraltar post-brexit.
- Innovation and Adaptation
Facing the challenges of Brexit has fostered a culture of innovation and adaptation among Gibraltar’s businesses. Gibraltar for many years has been keen to develop technological based products and services such as the Distributed Ledger Technology license regime.
While the immediate aftermath of Brexit was hugely negative from a Gibraltar point of view, opportunities have arisen. Gibraltar has very much maintained its relationship with the UK, and some see Gibraltar as a gateway to passport into the UK being located at the southern tip of Europe.
Gibraltar as a small country has become resilient and has demonstrated a capacity for adaptation.
The hope of some form of Schengen type deal would be a huge boost for Gibraltar and the UK collectively.
Tourism continues to flourish in Gibraltar with its unique attractions and stunning location which we hope can boost both Gibraltar and the local Andalucian market.