EU study ponders impact of Brexit on Campo

A European Union study into the impact of Brexit has outlined a number of remedial measures to address its potentially negative effects on the region, including building new infrastructures to make the border more accessible.

The study analyses the exposure of EU27 regions to the UK decision to withdraw from the EU. It includes case studies on the most exposed regions and countries to the effects of Brexit.

In its study on La Línea, the EU’s report finds that in the worst scenario, Brexit will have a negative impact on the population and on the economy of the municipality.

“Due to its geographical position, the city has developed very strong economic and social relations with Gibraltar over time,” the study states.

“The introduction of duties, barriers and restrictions to the flow of goods, capital and people will have a dramatic impact on the economy of La Linea in terms of turnover, employment and public revenues.”

The “Plan Estratégico de Impulso y Crecimiento de La Línea de la Concepción”, commissioned by the municipality, presents some proposals to address the complex issues linked to Brexit.

The main actions outlined in the plan include implementing the “Carta economica especial para La Linea de La Concepcion”, signed by national and regional authorities in 1997, which recognizes the special status of La Línea and guarantees financial aid and other supporting measures for the socio-economic development of the area.

Additional measures include improving the mobility of people and vehicles and reducing air pollution.

The study also highlights the possibility of reducing the difference in taxation between La Línea and Gibraltar to boost investments in La Línea.

As well as the need to invest more in tourism infrastructures to exploit the potential in La Línea and creating a professional training centre to help unemployed people find a job within the city perimeter.

Additionally, the report concedes that because of the uncertainty surrounding the future Brexit scenario, it is impossible to exactly predict its impact on the municipality.

But, based on historic experience and recent estimations provided by the study “Estudio socioeconomic del impacto del Brexit en La Linea de la Concepcion”, the report claims that in the worst scenario, Brexit will have a negative impact on the population and on the economy of La Línea de la Concepcion.

ECONOMY

In respect of the economy, the study states that La Linea and Gibraltar have “very intense commercial relations” and flags how most enterprises in Gibraltar depend on Spanish imports - around 10 million euro per year - mainly from La Linea.

“Therefore, both economies would be strongly damaged by Brexit through a collapse of import-export,” the study finds.

It added that the restriction in mobility of citizens of Gibraltar could also have negative effects on the economy of La Linea.

The annual total expenditure for goods and services deriving from citizens of Gibraltar is estimated at around £46 million in Campo de Gibraltar and £26 million in the rest of Spain.

In addition, Gibraltar citizens invest around £62 million in real estate, both in Campo de Gibraltar and in the rest of Spain.

“Brexit would drastically reduce the number of people buying and renting houses, as well as the consumption and public revenues related to tax paid by the people of Gibraltar.”

POPULATION

Reflecting on the impact Brexit could have on the population of the municipality, the study highlights how in 2016 the unemployment rate in La Linea, where labour supply largely exceeds the demand, was 35.2% compared with 1% in Gibraltar.

For this reason, many Spanish citizens of La Linea work in Gibraltar.

This group of workers suffered the most immediate consequence of Brexit: a reduction of almost 20% of their real wages caused by the GBP depreciation in the days following the referendum.

But the study underscores that this is not the only effect of Brexit on Spanish workers explaining that in a pessimistic scenario, many Spanish workers could lose their jobs.

“Taking into account that almost one in five citizens of La Linea is employed in Gibraltar, the impact on families would be dramatic, causing a massive migration toward areas with more favourable employment conditions, as already happened in 1969.”

“Brexit would have a negative impact also on Gibraltarians living in La Linea who could be forced to move back to Gibraltar, where the cost of living is much higher than in La Linea.”

Citizens of La Linea and Gibraltarians constitute a significant portion of the thousands of people commuting every day for work.

“Considering that Spanish and non-Spanish commuters in Campo de Gibraltar spend about £118 million per year, the consequences in loss of revenue due to Brexit would be especially detrimental for the municipality of La Línea.”