Jul 05 – Picardo Tackles Brexit Challenges While Remaining Optimistic About New Opportunities
The strong possibility that the UK will leave the European Union following last month’s referendum cast a long shadow over this morning’s Budget session in Parliament.
The Chief Minister used this opportunity to sum up the Government’s approach to the uncertain situation facing the Rock, its economy and its people over the coming years. Here is an extract from his Budget speech which can stand alone and specifically homed in on Brexit concerns:
Mr Speaker, my congratulations do not extend to the rest of the British people who I believe have made a historic error of judgement in voting to leave the European Union, although I sincerely hope that, if BREXIT proceeds, they will prove me wrong.
Pathology is not my strong suit, and I do not think that there is any great value in carrying out a post-mortem of the result. In fact, political commentators are doing that already round the clock in narrating to us the soap opera that the Westminster Village has descended into in the past two weeks.
But it is important to make an assessment of the current situation and to try to make some sense of what has come to pass and why.
Mr Speaker, the result of the vote in England and Wales seems to have been driven not by an understanding of the European Union and a desire to leave it. More likely, Mr Speaker, it was driven by ignorance of the truth about the European Union, by a desire to vote against the UK’s establishment and government for reasons unrelated to the European Union and, perhaps most importantly, based on claims which were exaggerations of the truth coupled with absolute untruths.
As I told those gathered for the Annual Dinner of the Federation of Small Businesses, I believe that the United Kingdom was sold “Brexit” on a false prospectus. I believe that many of those who argued to leave lied to the British public. And I believe that their exaggerations and hyperbole are now coming back to haunt them as they stare into the vacuum that are their plans for the future.
Mr Speaker, perhaps there was also exaggeration in some parts of the campaign in the United Kingdom on the side of Remain. I do not accept for one minute that this was the case here. But it is clear to me that the false BREXIT prospectus, if it were the prospectus for a financial product regulated by the Financial Services Authority in Gibraltar or the Financial Conduct Authority in the United Kingdom, would have led to prosecutions.
It is not an exaggeration to say that the United Kingdom has never faced such an absence of leadership as it faces today and that, of course, can have repercussions for us.
The Dutch Prime Minister, Mark Rutte, said last week that Britain is in chaos after the Brexit vote. In words which will have stung all of us who have long seen the United Kingdom as a bastion of stability and in an unstable world, he said that "England has collapsed politically, monetarily, constitutionally and economically.”
Mr Speaker, who could have imagined those words uttered about our beloved United Kingdom, or at least England, two weeks ago.
The Governor of the Bank of England, Mark Carney, has warned that the UK is suffering “economic post traumatic stress” and has said that the Bank of England will take “whatever action is needed to support growth.” Headlines in the Financial Times include a piece by Philip Stephens titled, “Britain is starting to imitate Greece”. This was unthinkable two weeks ago.
And this is a contagion which will not be limited to the UK. European Central Bank chief Mario Draghi told the leaders that the impact of Brexit could shave a cumulative 0.3 to 0.5 percentage points of growth off the euro zone economy over three years.
Honourable Members, like all the public in Gibraltar, will be closely following developments in the United Kingdom. In both the main parties at Westminster, developments seem to be proceeding at a faster pace than even social media and the 24-hour news cycle can manage. Could it be that human action has, for once, even overtaken the speed at which electronic communications can stay abreast of developments?
I will not be commenting at all on the party political activity at Westminster, riveting though it may be for those of us with an unhealthy interest in politics. But I will say this: I do wish for the United Kingdom as soon as possible strong and determined leadership in both the principal parties. This is a time for leadership in a determined direction.
In Gibraltar, Mr Speaker, there is strong leadership and we are united as a community and as a political class. We have spoken as clearly as ever in the result of the referendum. The people of Gibraltar have expressed their desire to remain part of the European Union and the Single Market with the same fervent desire as we have previously and repeatedly expressed our desire to remain British.
There are many permutations that may eventually provide the mechanisms for us to enjoy the type of relationship which the people of Gibraltar wish to have with the EU. I have no doubt that the United Kingdom will seek to be a facilitator of any such arrangements as we may wish and which we may be able to negotiate. I also believe that we have strong allies in the UK in both the Remain and Leave camps who will wish to help Gibraltar through this period.
The fact is that we also have a common purpose with those of other nations and regions in the United Kingdom who have voted to Remain in the EU. Honourable Members are aware of the progress of those discussions. I expect to be in a position to confidentially brief them again shortly on developments and will of course make such timely public statements in this House and outside it as may be appropriate.
There are other developments in hand of course. What I want to stress to the whole Nation, Mr Speaker, is that the final shape of what will be our membership or association with the European Union is not yet clear. The future shape of Government in Westminster, the spontaneous and huge demonstrations in favour of remaining in the EU and the demographic analysis of the vote suggesting that each day the majority moves more and more in favour of Remain, means it would be foolish to think that the future is discernable in any analytically reliable way.
It cannot be clear until many legal and political issues have been determined. One issue which is becoming prominent is whether a notice under Article 50 of the Lisbon Treaty can be given by a Prime Minister in exercise of the Royal Prerogative or if a vote of the House of Commons is required to trigger such a notice. A legal action appears to have commenced already in this respect.
Mr Speaker, we cannot therefore at this stage commit to any recast post-Brexit political or economic model until there is greater clarity. The leadership election in the Conservative Party presents so many permutations on its own that there are many options and alternatives to play for. Already we can see the beginning of economic policy for post-Brexit Britain taking shape.
The Chancellor, George Osbourne, says that the United Kingdom is “Open for Business” in his FT piece yesterday, targeting a low rate of 15% for UK corporation tax. One might be forgiven for seeing in that approach much of what we have been positioning: i.e. low tax, best practice, agility in the context of a very competitive business environment guaranteed by the rule of law and the flexibility of the common law. We are well placed on that road map and can adapt well to it if it progresses. The Sunday Times is not far off in its proposed blueprint for Britain. That analysis of the “profound implications for Britain's political and business establishment” suggests that the UK has “entered a different world, with new challenges, but also new opportunities” where it is essential to respond robustly to the challenges and seize the opportunities.
That proposal suggests a 10% corporate rate of tax should be fixed as part of an “Enterprise Agenda” with a scheme to reward private firms for getting young people into work which is not too dissimilar to our Future Jobs Strategy. These proposed models are interesting in being so close to our current economic model and we must watch to ensure we remain competitive as against the United Kingdom itself.
What is absolutely certain is that in order to emerge politically stronger and economically more competitive out of this process we need to keep both united and very alert to all possible permutations facing us. We need to consider, plan and act in a way that ensures that we are not mere travellers in the process that is under way. We must be able to influence and shape our future now as a proud nation that has come of age and not as a colony or overseas territory of a metropolis that is told what is good for it and has to lump it.
After meeting the Minister for Europe last week I have now received the British Government’s assurances in writing that we will be “fully involved” in the process that is getting underway in the UK and I have no doubt that we will be working in partnership with colleagues in London, leveraging the relationship we have already invested in and built, in finding the best possible way forward for Gibraltar.
I also have no doubt that the European Union will welcome the fact that the people of Gibraltar voted so overwhelmingly to Remain in the EU and the Single Market. I have no doubt that the most magnificent weapon in my arsenal today is that huge show if support for the pro-EU option on the ballot paper.
The fact is Mr Speaker that Gibraltar has spoken clearly and with one voice that we are not ready to say goodbye to Europe. We are not ready to leave Europe behind and we are not ready to turn our backs on the Single Market. We remain a cosmopolitan Mediterranean business hub that is happily multi-faceted, multi-cultural and multi-ethnic. We are a people who are not only open to immigration, we are positively open and reliant upon it given that almost half of the working population of our nation commutes in each day. All those EU workers amongst who were welcome before the 23rd of June, remain welcome today and they will remain welcome tomorrow. They are a huge and tremendously valued part of our success.
And Mr Speaker we are definitely not ready to see Gibraltar loose the benefits it can leverage as an efficient and commercially attractive gateway to Europe.
And this is not just an issue for us, but also, of course, for those who surround us and who support us with their labour and are part of our success.
As the recent report by the Chamber of Commerce reflected, direct, registered cross frontier workers can amount to over 12,000 of which 7,000 are Spaniards. Gibraltar imports almost £350m (around €420m Euros) a year from the Campo securing thousands of additional jobs in the region. And we contribute almost 25% of the Campo’s GDP, amounting to almost £847 million or more than €1bn.
I have met already with the Mayor of La Linea, Juan Franco and with the Spanish Unions Comisiones Obreras, and UGT as they are concerned about the effect that the BREXIT decision could potentially have on their members who are employed in Gibraltar or in industries in the region that are reliant on Gibraltar. I have been happy to confirm to them that the Government of Gibraltar will not create any obstacles to the free movement of workers coming across the frontier. We are entirely clear about that.
But what I have also told them Mr Speaker is that if the price of continued access to the EU or the Single Market or the price of free movement is Joint Sovereignty with Spain or indeed any other Spanish Sovereignty price, then the people of Gibraltar will not pay it.
It must therefore be clear to the world that the threat to the cross-frontier Spanish workforce is not being made by Gibraltar, by the United Kingdom or by the European Union. The only threat to cross-frontier workers comes from the current Spanish administration. It must be clear to everyone it is in this way that the current Spanish administration are the only ones who are creating uncertainty for frontier workers.
As ever with our Spanish counterparts, we must hope for the best but prepare for the worst. The Government’s view is that EU nationals are entitled to expect from Spain and hold Spain to a practical, workable and 21st Century approach. We cannot make it easy for them to act in an unconscionable manner on the basis that only EU treaty rights create or indeed demand a civilized and sensible arrangement between neighbours.
It will not be lost on Honourable Members that we enjoyed the free passage of people, including workers, and free trade for many years before a now long deceased and not missed dictator first imposed conditions and then closed the frontier in 1969. We must surely not be expected to accept as Spain's default position the regime suffered under Western Europe's last post war dictator.
And I therefore call on all in our community to meet this challenge with our usual resolve and also with a renewed commitment to promoting, serving and working for Gibraltar.
More than ever before this is a time to believe in ourselves. A time to trust the political leadership of this Community which will reach out to work with the whole Nation. A time not to fear the unknown, but to seize the opportunity to shape our future in our own fashion.
For many years Gibraltar Plc has given and all have taken. It is now also a time for us to give back more than we take. It is time to build on the solid foundations we have laid by our prudent investment in our nation. It is time to further solidify our already solid foundations even more.
Unity in the months (perhaps years) ahead does not only mean trying to align and agree our political priorities. It also means all of us working together to develop and grow our economy. We provide services to an international clientele. Every interaction with our clients, investors and visitors is an opportunity and a responsibility. We can and must all make a difference. In that respect, the public service will be hugely important. Every Civil Servant, every public servant must be alive to the need to ensure that Gibraltar is now seen as more efficient than other places, an easy jurisdiction in which to do business. No one can think it is acceptable to simply take the “computer says no” attitude to the public again. We have no easy ride from here on in. We have to be ready to do more, go further, work harder, be more efficient and wield greater influence than ever in building our common future in order to ensure we stay relevant, competitive and growing.
The Civil Service has never let Gibraltar down before, I am sure it will not do so now and will be ready to meet the challenge that will come as we send out the message that we are open for business as usual, we are open for business with Europe and we are open for business with the World.
Mr Speaker, in this respect, Honourable Members will be pleased to hear that the state of private sector projects in Gibraltar remains healthy despite the BREXIT result. We are about to see the finalization of negotiations for the commencement of a major new reclamation project in the area of Coaling Island. Land reclamation needs to continue now perhaps more than ever so that we can ensure that businesses can have their workers based here and not dependent on the ability to commute easily into Gibraltar. A number of projects to allow for gaming and financial services workers to be housed in Gibraltar on new ‘key worker housing’ terms have been proposed to the Government and are under active consideration. Our community needs to understand that we need to build more and build higher in order to house those that we need to have in Gibraltar if we are going to maintain our standard of living for future generations.
And in the context, Mr Speaker, we are continuing our negotiations in respect of the plot at Rooke which we expect will be handed over very shortly to the Government by the MoD. I expect to hold meetings with the preferred bidder in respect of that exciting potential development in September.
Negotiations in respect of the Eastside project also continue, unaffected by the BREXIT result but hampered by complex discussion and engineering concerns. And new projects are being considered and proposed on which I would expect to make announcements soon and which will bolster economic activity in coming financial years. World Trade Centre, Ocean Spa Plaza, Midtown One & Two are all already under way. The new Kings Wharf development of £60m and Eurocity are about to get underway and are also confirmed, despite BREXIT, amongst others soon to be announced.
The Government has already done considerable work to attract business to Gibraltar which is not dependent on our access to the EU. More details of these businesses will emerge as further progress is made on the relevant projects being undertaken. In this respect, the work we have done in the United States and in the Far East, in particular via Jason Cruz in Hong Kong is now expected to become even more relevant. The Gibraltar/US AmCham and the Gibraltar/Israel Chamber of Commerce are clearly even more welcome than they were before.
In order to make Gibraltar even more attractive for private sector investment, I have asked the Minister for Financial Services to reconvene the Working Group that reported on the proposed new mechanisms for Category 2 status and to also urgently progress the work being undertaken on HEPPS 2. Mr Speaker, it is worth noting that Monaco, to which we are so often compared, is not in the EU and remains hugely successful.
The competitive tender process for onshore storage of bunkers will continue unaffected by the BREXIT result, as the parties that have tendered have expressed their desire to continue in the process despite the referendum. This will be hugely beneficial for the future of our bunkering industry and will be alongside the potential for expanding LNG bunkering in the Bay.
In the insurance industry, a leading practitioner in the sector has written that “Brexit does not represent doom and gloom for the Gibraltar insurance industry. Far from it. It simply means that the sector needs to partially reposition itself.”
In respect of online gaming, a number of companies have already confirmed continued support and commitment to the jurisdiction for the long term and are voting with their leases to demonstrate it. William Hill, Lottoland and others have already made clear statements of continued commitment to the jurisdiction.
One example was the statement from Ed Ware, the CEO of 32Red Plc who said this week that “32Red was born and bred in Gibraltar and it is very much business as usual. We have a strong relationship with Gibraltar on many fronts and are heartened that the jurisdiction shows every sign of continuing to progress and develop despite the surprise result in the UK. Gibraltar is a centre of excellence for gaming and we remain committed to working towards another 14 years of great success here.” Mr Speaker this is language that the whole House will be happy to hear and I thank Mr Ware for those heartfelt words.
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