Almost exactly ten years since David Cameron first announced the Brexit referendum, the man at the helm of “The Rock”, who has endured a marathon of constitutional tightrope-walking, now finds himself on the precipice of a historical irony. A staunch advocate for remaining in the European Union, Picardo (53) is now preparing to unveil a treaty that could, paradoxically, provide Gibraltar with more fluidity and economic opportunity than it ever enjoyed.
In an expansive interview, our Editor at Large, Alistair Thompson, talks to the Hon Fabian Picardo KC MP, the Chief Minister of Gibraltar, about the looming treaty with the EU, the “Solomonic” challenges facing the gaming industry, and why his relationship with Westminster remains “un-cracked” despite the shifting sands of British politics.
The Brexit Paradox: Fluidity Over Membership
The most striking takeaway from Picardo’s current outlook is his optimism regarding the upcoming UK-EU treaty concerning Gibraltar. For years, the border at La Línea has been a barometer of political tension. Now, Picardo expects a breakthrough that will redefine the frontier.
“We expect that we will be publishing a treaty on the relationship with the European Union in weeks,” Picardo reveals. He notes, with a wry understanding of Brussels’ mechanics, that the text will likely leak before the official ink is dry. “The European Commission sends the text to all of the embassies before the council process begins—and notoriously in the European Union, when documents are sent to the embassies, they leak.”
The treaty promises a radical shift. While Gibraltar will not be a member of the Schengen area or the Common Customs Union in the traditional sense, it will enter a bespoke relationship with both. This will create a “common travel area” with Schengen and a unique customs arrangement.
“It’s complex, but it’s going to completely change the way that we interact with the rest of the European continent,” Picardo explains. “No government of Gibraltar has ever had stewardship of the economy with this level of fluidity. It’s very exciting.”
The irony is not lost on him. As a member of the EU, Gibraltar was excluded from the Common Customs Union and Schengen. By leaving the EU, the Rock has found the leverage to negotiate entry into the very mechanisms of fluidity it previously lacked. “Ironically, we’re going to be in for Schengen and for freedom of movement of goods. Although I still remain a committed remainer, I might think that Brexit might be one of the best things that has ever happened to Gibraltar.”
Life on the Ground: Taxes and Transaction
What does this mean for the average resident or trader? Picardo describes a future where, once through Gibraltar and Schengen immigration, a traveller has a “free run of the whole continent all the way up to Norway.”
On the trade side, the changes are equally significant. To align with EU standards while maintaining a competitive edge, Gibraltar will introduce a “transaction tax” to replace the absence of VAT. This tax will be pegged to the lowest VAT rate in the Union—currently Luxembourg’s 17%.
“We will start at 15% and go to 16% after a year, and then 17%,” Picardo notes. “This guarantees Gibraltar that people always have a competitive advantage, at least in Southern Europe.” He also anticipates that the UK’s own evolving relationship with the EU—such as a potential SPS agreement—will allow foodstuffs and goods to flow from Britain to the Rock more easily than ever before.
The Gaming Industry: A “Solomonic” Challenge
While the treaty offers a bright horizon for trade, Gibraltar’s economic engine—the online gaming industry—is navigating choppier waters. Recent tax increases in the UK budget have sent ripples through the sector.
Picardo is diplomatic but clear about the risks. “The UK is the most sophisticated market in the world when it comes to online gaming… the symbiosis between Gibraltar and the UK is as strong as it is in financial services.” However, he warns that aggressive taxation can be a double-edged sword.
Referencing the advocacy of Gordon Brown regarding the link between gambling levies and child poverty, Picardo expresses support for the social goals but cautions against the “black market.”
“You’ve got to look at whether that pushes players to the unregulated market,” he says. “When you’re trying to fix one problem, you don’t want to create another by opening the doors to the black market… who ignore the taxation burdens of the United Kingdom.”
The Chief Minister describes the UK government’s recent tax decisions as “Solomonic”—a middle ground between the high levels advocated by some and the concerns raised by jurisdictions like Gibraltar. With a two-stage increase in taxation hitting this April and next, Picardo says the market is “braced for a difficult impact,” but he relies on the “ingenuity” of operators to adapt.
Westminster: A “Sister Party” and New Challengers
Politically, Picardo is a veteran of the Westminster carousel. Having worked with the Cameron-Clegg coalition, the May, Johnson, and Sunak administrations, he now finds himself in a unique position with a Labour government.
“The link between the Socialist Party in Gibraltar and the Labour Party in the United Kingdom is one of sister parties,” he says. “We’ve always worked very well together, even when they were in opposition.”
This ideological alignment has strengthened a relationship that Picardo describes as “not cracking,” pointedly contrasting Gibraltar’s stability with the tensions seen between the UK and other Overseas Territories.
However, the rise of “challenger” parties in the UK, such as Reform UK and the Greens, presents a new landscape. Picardo remains pragmatically agnostic. “We’ve always had a stand at all of the party conferences, including the Reform party conference,” he says.
He recounts a conversation with Nigel Farage, where he briefed the Reform leader on the treaty. “I said to Nigel… I thought leaving the European Union was a mistake, but it’s only as a result of leaving the EU that we may have caught the opportunity to leverage the Gibraltar treaty.”
The Ingenuity of the Rock
Fabian Picardo’s vision for Gibraltar is one of ultimate pragmatism. He is a leader who hasn’t changed his mind about the merits of the EU, but who is more than willing to exploit the “opportunities” Brexit has inadvertently created.
As the treaty text nears publication, the Chief Minister is betting on fluidity, high-quality regulation, and a “hand-in-glove” relationship with London to secure Gibraltar’s future. For a “committed remainer,” he seems remarkably adept at making the best of a world he fought to avoid. Ten years on from the referendum announcement, Picardo isn’t just surviving Brexit; he’s attempting to turn it into Gibraltar’s greatest strategic win.