CM insists treaty will protect Main Street and Gibraltar’s British identity 

Chief Minister Fabian Picardo told Parliament that the UK/EU treaty on Gibraltar will not “erode our uniquely British identity” or leave retailers worse off, as he rejected Opposition concerns about tariffs and a new transaction tax.  

Mr Picardo said the treaty would facilitate increased footfall that would benefit retailers and open new opportunities for trade, adding the alternative would have been a Main Street “with no footfall, open only to local consumers”.   

He was responding to questions from GSD MP Craig Sacarello, who had raised concerns that the new arrangements could impact on British brands in Gibraltar, especially if they sold goods sourced from the UK but made in third countries. 

“Our agreement with the EU will not in any way, shape or form erode our uniquely British identity, our Gibraltarian identity, our way of life and our way of doing things,” Mr Picardo said. 

Mr Sacarello questioned the impact of the forthcoming transaction tax on business costs, consumer behaviour and viability, particularly in the retail and wholesale sectors, and asked whether the Government would support “ailing businesses” that might be directly affected.  

He also raised concerns about “the possible disappearance of strong British brands which have for so many decades anchored Main Street and beyond” if businesses faced tariffs in addition to the new transaction tax.  

Mr Picardo said the Gibraltar Government had carried out estimates and assessments but would not disclose them at this stage.  

“It is the case that negotiations on our agreement with the EU have now been completed, but it would not be prudent to provide the Honourable Member with any of the details requested,” he said, adding that the figures were “commercially and politically sensitive” before implementation.  

He said that in September 2025 he created the Business Transition Advisory Group to support the business community as Gibraltar prepares for and implements the treaty arrangements.  

“And I've said many times we simply do not accept that businesses will need support as a direct result of having to pay the transaction tax at higher rates than that which apply under the current import duty regime,” he said.  

Mr Picardo argued that the agreement would underpin retail activity by increasing access and footfall. 

“The agreement will benefit not only British brands in Main Street, but Main Street as a whole,” he said. 

“Visitors in their millions eager to shop would be able to come to Gibraltar with an ease that has never been known to us.”  

“By land, sea and air, all attracted by the British appeal which is one of the hallmarks of our products.”  

“Visitors will come to British Gibraltar to buy British products.”  

“The demand will remain.”  

“What we have avoided with this agreement is a Main Street with no footfall, a Main Street open only to local consumers.”  

“That was the choice we faced.”  

“The Government has and is working with the retail sector in Gibraltar to ensure that they will be able to make a success of the agreement.”  

Mr Sacarello said businesses had told him that where products are routed through the UK but originally sourced from a third country, they could face “an additional 12% tariff” when entering the EU single market, which, combined with transaction tax, could “render the businesses uncompetitive”.  

Mr Picardo said he did not agree with the analysis, arguing that the treaty would place Gibraltar inside the single market and that the pricing comparison should be made against EU member states.  

He said that where a product attracts a 12% duty under the UK-EU Trade and Cooperation Agreement, it would also face 21% VAT when sold in Spain, whereas in Gibraltar it would attract the duty plus 17% transaction tax, including reduced rates on some items.  

Without naming the brand, he pointed to recent news that British brand Topshop had announced plans to return to Gibraltar. 

Mr Sacarello asked whether any additional revenue from the tax could be ringfenced for support.  

Mr Picardo insisted “…for the millionth time, we don't think there will be ailing businesses”, adding any support for businesses that required it would have to comply with EU state aid rules.  

The Leader of the Opposition, Keith Azopardi, later asked whether the Government would share its assessments confidentially with the GSD.  

Mr Picardo said he was prepared to invite the Opposition to his office for a briefing involving the Deputy Chief Minister and the Attorney General on what the information showed and “the text of the treaty”.