Gibraltar’s “economic resilience” will soften the blow should the UK economy enter a recession as a result of Brexit, Chief Minister Fabian Picardo has insisted, even while acknowledging this was his top concern against the backdrop of ongoing withdrawal negotiations.
Gibraltar’s exposure to the UK market means a downturn in Britain would have a knock-on effect here, Mr Picardo said as he was quizzed on the subject by Gibraltar’s news editors for GBC’s Direct Democracy programme on Tuesday evening.
But years of economic growth will provide “an element of flex” if the worst-case scenario materialises, he said.
In a wide-ranging discussion, Mr Picardo also ruled out calling a snap general election prior to Brexit, explaining that to do so would be “irresponsible”.
“It’s not going to happen,” he said.
“Going to the people when you’ve got a fragmented opposition is probably what the playbook tells you you should do. [But] going to the people when you’ve got a mandate to deal with Brexit and you are dealing with it as we are, [that] would be the wrong thing to do, it would be irresponsible.”
“We are going to see this through and we are going to see Gibraltar through this Brexit quagmire successfully,” Mr Picardo said.
Asked about the likelihood of Britain crashing out of the European Union without a deal and whether Gibraltar would be worst hit by such a scenario, Mr Picardo said: “I don’t think we would be.”
However if there is a breakdown between the UK and the EU of the trading relationship that will undoubtedly create a recession in the UK, he explained, adding that Gibraltar’s exposure to the UK economy was a critical factor.
Mr Picardo said he was therefore more concerned about the Rock’s economy if there is a recession in the UK, however that may be caused, because of Gibraltar’s exposure to the UK market than he is about the current political debate about the future UK-EU trading relationship.
This is something that in any event Gibraltar cannot influence, he added.
“If we have an exposure of 90% of what we do happening in the UK market, whether it’s the selling of online gaming services or the selling of automotive insurance, and that market goes into recession, that affects us more directly because it’s the spending in that market that’s going to affect the spending of the companies that are established in Gibraltar,” he said.
Asked what his contingency plans are in the event of a downturn in the UK’s economy, Mr Picardo pointed to the Rock’s economic resilience.
“If you look where our surpluses lie, they lie beyond where you would expect them to be in the context of the sort of issues that have been faced by companies trading in the UK today,” he said.
He highlighted how there is already less growth in the UK economy yet there is still prosperity in the companies trading from Gibraltar into the UK.
“Gibraltar can afford to lose some business but we don’t want to lose any business and we want to grow the businesses that we have here,” Mr Picardo added.
The Chief Minister further flagged how the Rock’s economy has grown by more than 60% over the last six years and said “that gives you an element of flex”.
“A lot of the employment that there is in Gibraltar is not local employment today so you have an element of flex there again,” he said, adding that unemployment in Gibraltar during the last quarter was 85.
“We must continue to push for growth, which is what we do every day in the Government,” Mr Picardo added.