UK sends clear, positive message on continued market access and common regulatory standards after Brexit
The British Government yesterday reaffirmed its commitment to maintaining Gibraltar's post-Brexit access to the UK market for financial services, highlighting a shared commitment to strong regulation, supervision and cooperation outside the European Union.
The message was delivered by Stephen Barclay, Economic Secretary to HM Treasury, to a high-powered audience of UK and Gibraltar business executives at the annual Gibraltar Finance Centre lunch at the Guildhall.
“I know that Gibraltar has no intention of being a back door, but instead a centre of high quality financial services,” Mr Barclay said.
"And it remains the UK Government's intention that Gibraltarian financial services firms continue to have the access to the UK they have today and that any disruption is avoided.”
The message will be welcomed by the business community both here and in the UK, building as it does on the commitment first expressed by Liam Fox, the UK’s international trade minister, at the same event a year ago.
The fact that this year it came from a Treasury minister will further underscore the UK’s undertaking to work with Gibraltar and seamlessly move from an EU-based regulatory framework to one agreed bilaterally.
Mr Barclay said the UK would also seek to expand Gibraltar’s access to the UK market where possible, and spoke too of broader commitments to consult Gibraltar on future trade deals.
Importantly, he also signalled ongoing discussions on a double taxation agreement between the UK and Gibraltar.
Throughout his speech, however, the focus was on maintaining strong oversight and regulation.
Mr Barclay said London was the world’s leading financial centre, particularly in respect of insurance, but that its ecosystem required constant improvement and vigilance, and that this must continue after Brexit.
“The UK speaks from experience when we reformed our regulatory regime following the financial crisis,” he said.
"Alongside this, Gibraltar's insurance market has grown remarkably in recent decades and we want this to continue for the benefit of Gibraltar and for the benefit of consumers in the UK and elsewhere."
"To this end, the Chief Minister has confirmed that Gibraltar will meet UK standards of regulation, supervision and enforcement."
"The UK Government and the Government of Gibraltar are in ongoing discussions on how to achieve this, looking first at insurance where cross-border trade is most significant,” he added, highlighting new statutory powers for the regulator - to be introduced in 2018 - as “an important step”.
Mr Barclay, as is common now for every UK minister speaking publicly about Gibraltar, also reaffirmed the UK Government’s double-lock commitment on sovereignty.
‘TRUST AND CONFIDENCE’
The Guildhall event attracted some 330 guests who had paid to network and listen to the speeches before dining on truffle chicken bonbons and seared beef Wellington washed down with a choice of New Zealand white wine or a French Malbec.
The guests were also addressed by Chief Minister Fabian Picardo, who gave them a bullish assessment of developments in Gibraltar since the Brexit vote in June 2016.
Mr Picardo said Gibraltar’s small economy was nimble enough to reposition itself swiftly, highlighting work done in new areas of business including fintech distributed ledger technology.
The Rock continued to attract new business and invest in critical infrastructure, he told guests.
Echoing Mr Barclay, the Chief Minister underscored Gibraltar’s commitment to maintaining common regulatory standards with the UK and said this was crucial to bolster trust and confidence that extended beyond the issue of sovereignty.
He said Gibraltar and the UK were working to create “…a real commercial space for Gibraltar and UK businesses to exploit.”
“And we are working to ensure that the regulatory outcomes that we have achieved are sustained and developed to encompass the new opportunities that will arise,” he said.
The Chief Minister said the discussions with the UK’s HM Treasury on common post-Brexit regulatory standards were “substantive and detailed”.
“The Treasury have demonstrated a full and deep engagement in working with us as we develop the common regulatory standard that customers of Gibraltar’s financial services sector will be able to continue to rely on in the United Kingdom and around the world in the future after we have left the EU,” he said.
“We will be able to move seamlessly from a common regulatory standard set at the EU level to an equivalent or higher regulatory standard agreed bilaterally in the best interests of consumers and our respective jurisdictions.”
“That is what partnership is all about.”
The message from the Treasury minister was welcomed too by the Gibraltar Finance Centre Council, whose chairman, Peter Montegriffo, said it illustrated the work that was being done to ensure the relationship between Gibraltar and the UK was "shored up and Brexit proofed”.
He highlighted in particular the work on insurance and the double taxation agreement.
“Both these areas are critically important,” he said.
The Treasury minister himself had highlighted that one fifth of UK vehicles were insured in Gibraltar, Mr Montegriffo said, and the industry will be encouraged by his words.
Not only that, he added, Mr Barclay had also stressed the importance of the sector not just to Gibraltar but to UK consumers, many of whom might struggle to find insurance were it not for the capacity and innovation offered by Gibraltar.
On the double taxation agreement, "...the fact that the minister chose to highlight that is welcome in stressing the importance they attach to it."
"The fact that a Treasury minister, who at the end of the day minds the pounds and pence, is stressing these things is particularly significant," Mr Montegriffo added.
"He knows the importance to Gibraltar of continued viability of these sectors, so his words will carry particular weight.”
And yet, while the industry will find Mr Barclay’s message positive, the fact that the Brexit deadline of March 2019 is looming means many executives will want to see faster progress on practical agreements.
"The only thing that he didn't say which I think is important for us to focus on is the need to add a sense of urgency to this work," Mr Montegriffo said.
"Clearly we are just over a year [away from] a potential cliff edge, a lot of businesses in the UK and elsewhere will have been developing plans on what they will do, and I think it's up to us to make sure that we pick up on the minister's words and infuse them with the urgency which they need in order to have practical steps to be agreed well ahead of the time when businesses have to take decisions that they are trying to put off."