In a speech at the Lancaster House in London, May outlined 12 objectives for a Brexit deal, confirming the UK would not remain a member of the European Single Market, in a move signalling the death knell for EU passporting rights.
In December, the House of Lord’s Brexit committe warned that, if passporting is scrapped, around 200,000 jobs could be lost from the UK’s financial services industry.
A report published by Gibraltar’s government last week stated that nearly half of all jobs on the British overseas territory would be lost if a hard Brexit deal is struck.
May said the government will negotiate elements that benefit the UK.
UK passporting?
Speaking exclusively to International Adviser, James Tipping, finance centre director at Gibraltar Finance, said the overseas territory does not expect to see a “significant outflow of business” despite the loss of EU passporting.
“Gibraltar’s financial services industry is very significantly UK facing. As an example, over 90% of Gibraltar’s insurance business is written into the UK. UK access is set to continue.
“Therefore, in a hard Brexit – whilst not all firms would be protected from the consequences – we do not anticipate a significant outflow of business from Gibraltar,” he said.
Tipping added that a hard Brexit would provide “significant opportunities” for Gibraltar as an alternative gateway destination to the UK if the 27 EU member states are barred from accessing UK markets.
“Indeed a hard Brexit means that the 27 member states would not be able to access the UK. That may, in turn, provide Gibraltar with significant opportunities; as an alternative to setting up in the UK itself, institutions could set up in Gibraltar as a gateway to the UK.
“We continue to see interest from financial services firms applying for authorisations in Gibraltar,” he said.
EU passporting
Given the UK’s exit from the EU single market, it’s unlikely that May will be able to preserve EU passporting rights for the financial services sector – a move set to have a huge impact on such industries in the UK and Gibraltar.
Under the current system, financial services firms headquartered in EU member states have the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules known as ‘passporting’.
Many financial services firms use Gibraltar for passporting to the rest of Europe.
‘No surprise’
Despite the dire warning, Gibraltar said it is “well prepared” to deal with “every eventuality” of the Brexit processing, adding the 12-point plan outlined in May’s speech “will not take anyone by surprise”.
“It was positive to see confirmation that the objectives of the UK include the negotiation of transitional provisions,” the government said on its website.
“In Gibraltar, the government has already produced a detailed analysis of the impact of Brexit across every area of government including the private sector. This caters for every eventuality. Gibraltar will therefore be well prepared to face whatever challenges Brexit may bring.”
It added that the “transitional provisions” would allow further negotiation on “certain policy areas […] so designated areas would remain unchanged for a longer period of time”, which Gibraltar hopes would “bring greater certainty to business”.
This may be a reference to the UK and Gibraltar negotiating to keep EU passporting rights for the territory as part of a ‘transitional deal’.
For British expats living across Europe, she said: “We want to guarantee rights of EU citizens living in Britain and rights of British nationals in other member states, as early as we can.”
May also confirmed that the UK parliament would get a chance to vote on the deal, which will involve seeking a phased implementation period.
