Are Gibraltar’s finance and gaming jobs secure post-Brexit?

Are Gibraltar’s finance and gaming jobs secure post-Brexit?

Relocation / The Job Market / June 27th, 2016

Of all the uncertainty caused by the Brexit vote, a great deal is concentrated in the small British Overseas Territory of Gibraltar, on the Southern tip of Spain. The small colonial peninsula voted overwhelmingly in favour of remaining in the EU because the common market has been incredibly lucrative for the local economy, which relies heavily on finance and gaming trade aimed at the continent as well as a significant pool of workers who commute across the border every day from Spain.

It is therefore unsurprising that ever since the unexpected outcome of the referendum we have had a significant increase in calls from Gibraltar residents considering relocation.

So first let’s ask the big question: are Gibraltar’s gaming and finance jobs secure? Well, any actual exit from the European Union is, of course, more than two years away. The date depends on when the new Conservative leader chooses to trigger Article 50, which will be no sooner than October. The exact outcome of the process and the deal struck with the EU will largely determine Gibraltar’s fate in the long term. Despite this, companies need to plan ahead and it is entirely possible that some may choose to start moving jobs or even entire offices to lower-risk jurisdictions if they feel the risks of staying outweigh the costs of moving.

What are those risks? The biggest risk is that Gibraltar ceases to be an independent jurisdiction, something Spain has desired for a long time and has made renewed calls for after the recent vote. While this would be disastrous for the local economy, it is also extremely unlikely – no British government is likely to allow a Spanish take-over, regardless of how negotiations with the remaining EU states go.

The possibility of a disrupted border is much more worrying, however. Spain has used border disruption to put pressure on Gibraltar before, a bullying tactic which was limited only by EU rules and oversight. Given the number of goods and workers that the peninsula needs to come across the border every day simply to sustain business as usual, any increased leeway Spain might have to disrupt the border after a British exit could be disastrous in itself. On top of such essentials, it would also substantially limit the leisure options of people living and working in Gibraltar, who regularly cross into Spain for shopping, golf days, or nights out.

Management of the border issue is the biggest potential challenge to Gibraltarian companies. Whilst increased costs of accessing EU markets are a worry, particularly for finance companies that have relied on EU ‘passporting’ rules, the border dispute could be more costly. In addition to the impact on the quality of life expected by their employees, a belligerent Spain could do a lot more to damage the jurisdiction and its companies if a dispute escalated – such as severely inhibit the jurisdiction’s telecommunications infrastructure.

Uncertainty in these areas, combined with the potential loss of freedom of movement within the EU, has meant that many individuals are already considering their options; planning ahead and making an early move seems preferable to waiting for an uncertain outcome. Whilst some are considering the continent or a move back to the UK, the overwhelming majority are looking at Malta as their next step.

There are several reasons for this, which revolve around fundamental similarities between the two jurisdictions. They are both English speaking with a Mediterranean climate (although Malta is, on balance, even sunnier than Gibraltar). They have similar tax regimes. They both have strong financial service and online gaming markets. On top of that, Malta’s employment market in these areas is booming, with all of the specialisms common in Gibraltar in extremely high demand in Malta, to the point that they are importing a lot of skilled labour – and paying excellent salaries to do so. The referendum result has only accentuated the relative benefits – as well as being a fully independent EU member, Malta salaries are now more attractive versus those in the UK and Gibraltar because of Sterling’s fall versus the Euro.

There are other possibilities, of course. One even more ‘British’ option is the Crown Dependency of the Isle of Man. Like Malta, it also has a lot of job openings in gaming and financial services, low taxes, and excellent infrastructure. It won’t be part of the EU any more than Gibraltar will, but it stands to be substantially less affected by Brexit. Particularly high salaries are available for individuals with technology and development skills.

We obviously don’t know what is in store for Gibraltar in the long run, but for many of those choosing to move that is exactly the point.

If you are concerned by the consequences of the referendum for your local job market and would like to discuss relocation options, please email Julian Perigo or call +356 2704 1691 during European office hours.