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Economic Interdependency Brexit or No

Peter Schirmer

Infographic: @Quintiestudio

The Fletcher Report, John Fletcher

Whatever the outcome of Britain’s divorce from the European Union, Gibraltar next should look to the campo de Gibraltar – and particularly neighbouring La Linea – for cooperation and future growth, according to a leading economist who for more than a decade has studied – and advised on – the interlinked fortunes of the Rock and southern Andalusia.

Much will depend on developments at the frontier, for any difficulties at the border, or a need for visas for those making the daily crossing, would add a new dynamic to the economic equation. And a ‘hard’ or ‘no deal’ Brexit could be as damaging to the economy of the Campo as to that of Gibraltar, according to Prof John Fletcher, Vice Chancellor of Bournemouth University and an internationally renowned economist.

Professor John Fletcher

In the past ten years on behalf of the Gibraltar Chamber of Commerce, Fletcher has carried out two in-depth surveys on the economic relationship between the Rock and the Campo as well as giving evidence (and advice) to the European Union Select Committee of Britain’s House of Lords on issues related to Brexit.

With little more than three weeks to the March 29 deadline for Brexit and Britain’s decree nisi from the EU to take effect, Fletcher described the situation as ‘an embarrassment’ and ‘a political shambles’.

‘A “hard” Brexit will have an enormous impact on both Gibraltar’s and Andalusia’s economies,’ he told Reach. ‘ At least 25 per cent of Campo de Gibraltar’s economy depends on Gibraltar, and the impact on La Linea – which already has 35 per cent unemployment – will be particularly heavy.’

And he highlighted Gibraltar’s ability to draw on the pool of workers who cross daily to the Rock from the surrounding area of Spain: ‘The frontier workers are exceptionally important for Gibraltar.

Statistics indicate that some 14,000 jobs in Gibraltar are held by frontier workers, making up almost half the entire workforce. Some 8,000 of these are Spanish nationals.

Although online gaming also employs a significant number of people who have their homes in Spain and would be affected by any change in arrangements at the border, the industry itself is largely focused on UK customers, so access to the Single Market is comparatively less important. Nevertheless, Fletcher warns, a “hard” Brexit could make it tougher for Gibraltar ‘to compete for European business against gaming agencies located within the EU.’

And Fletcher points to the many witnesses – including himself – who stressed to the House of Lords Committee ‘the importance of Gibraltar to the economy of Andalusia, particularly the border area known as the Campo de Gibraltar, which has some of the highest unemployment rates in Spain. It would suffer a ‘significant loss’ if Gibraltar were cut off from the region after Brexit.

Infographic: @Quintiestudio

And, Fletcher added, as well as jobs, Gibraltar contributed €800 million to the GDP of the region through trade and visitor spending.

(According to an economic impact study conducted by Fletcher three years ago, Gibraltar imported almost £381 million in goods and services from Spain; and residents of Gibraltar also spent £73 million on and other goods and services in Andalusia during 2013, of which £46 million was within the Campo de Gibraltar.

That was the situation five years ago – but since then, there has been a ‘significant increase’ which cannot yet be quantified).

However, although the economic futures of the Campo and Gibraltar will remain closely interlinked, Fletcher is less positive about proposals that have been mooted that post-Brexit Gibraltar companies could register in Spain (specifically La Linea) while continuing ‘back-office’ operations from the Rock.

‘They would face a higher, Spanish tax regime and reduce the attraction of Gibraltar in areas such as gaming and some financial services,’ says Fletcher.

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