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Can Malta mitigate Brexit?

03.02.2017

The EU Presidency

As Malta completes the first month of its inaugural 6-month Presidency of the Council of the European Union - it is not only faced with significant responsibility, but with major challenges and opportunities. Chairing most of the Ministerial meetings in Brussels and Luxembourg and hosting high-level meetings and conferences, Malta is in a position to influence and shape the EU’s agenda and to push forward agreements in its stated priorities of migration, security, single market, social inclusion, neighbourhood policy and maritime affairs.

But the Maltese Presidency will also have to face the issue of Brexit, with the strong possibility of the formal exit process being triggered by the UK before the end of March. Whether the UK does or does not invoke Article 50 of the Treaty of the European Union which regulates the departure of any Member State during Malta’s tenure, Malta is considered by all to be an “honest broker” between the EU and the UK.

Brexit – challenges and opportunities for Malta

As one of the UK’s closest allies and trading partners, the UK’s exit from the EU could have far-reaching consequences for Malta itself. Some of the possible challenges include a decline in British tourism to Malta and a fall in UK imports of Maltese Goods and Services. UK tourists represent the largest group of visitors to the Maltese islands. Should Sterling devalue further against the Euro, the cost of Maltese holidays will rise. Any such currency fall will also make Maltese exports to the UK more expensive. The currency devaluation will also result in reduced income for a number of Maltese nationals who receive a UK pension in Sterling.

However, a sharp drop in Sterling against the Euro would also result in greater spending power for those visiting from Malta or purchasing UK goods or services.

Malta – an alternative for UK-based companies to mitigate Brexit associated risks

A key feature of Malta is that it is one of the few EU countries with English as an official language and the only one situated within the Schengen area. Politically and economically stable, Malta is strategically located with well-developed modern infrastructure and communications, a well-educated and flexible workforce and lower operating costs than most of Europe. Complemented by an attractive tax regime, the highest GDP growth in the EU, robust yet pragmatic regulatory mechanisms and strong financial services; tourism; i-gaming; maritime; and aviation sectors amongst others, Malta is considered one of the most attractive European destinations for trade and investment.

With Brexit raising concerns for many UK based companies – Malta offers a genuinely viable alternative base. Unless continued access to the EU Single Market is maintained in specific UK-EU agreements – for example “financial services passporting rights” – UK-based companies and financial institutions will not be able to operate in the EEA in the same manner as they currently enjoy. Maintaining an EU workforce might also prove problematic.

Malta and the UK enjoy a special relationship which goes above and beyond EU agreements. Being a former British Colony as well as a member of the Commonwealth, Malta will undoubtedly seek to ensure the best possible Brexit deal for both the EU and the UK. And with UK/Malta bilateral agreements in place covering health, education, social security cooperation and mutual support, the special relationship is safeguarded for the future.

Consequently more and more UK based companies are now seeking to relocate or invest in Malta to mitigate the risks associated with Brexit, ever deepening and widening this relationship. This was recently backed up by an InterNations survey which identifies Malta as the leading choice for British banks and companies should they decide to relocate after Brexit.

In a nutshell…Malta should be your first choice if you are looking to relocate, invest or create opportunities for trade in Europe. So grasp the opportunity and speak to us today at info@nexiabt.com