Impact Of Brexit On Spain?
- Víctormanuel Paz
Conclusions – Brexit is bad news for Spain. The economic and human bonds as well as the Atlantic character shared by Spain and the UK suggest that Spain is one of the countries that has most to lose from Britain’s departure from the EU. Brexit will deprive Spain of a strategic partner on some of the key issues within the Union.
- It will also lose out economically due to the very considerable volumes of trade, inward investment and tourism that flow between the two countries (these will continue to be significant, but they will face obstacles that are currently non-existent);
Lastly, it will lose out to the extent that a weaker EU, deprived of Britain’s foreign and security policy, will wield less influence in the world and be less capable of promoting its values and interests, precisely when the EU most needs to put its imprint on globalisation amid the rise of the emerging powers and the increasing isolationism of the US.
- The specific negative effects are therefore manifold, whereas the potential for positive generic impacts (the drive towards European integration and a certain increase in Spanish influence among the EU 27) cannot with any certainty be viewed as adequate compensation;
It is true, however, that developments might yet unfold that change current perceptions. The very considerable degree to which Spanish policy mirrors EU policy entails that the future relationship between Spain and the UK will be essentially determined by the agreement London strikes with Brussels, the details of which remain unknown; it should come into force in 2021 once the transitional period, due to commence at the end of March 2019, has expired (when Brexit will finally materialise).
Although Spain can strike bilateral deals with the UK, this will only happen once Brexit has been consummated: the Spanish authorities have wisely made it clear that they will not negotiate any aspect in parallel in order not to undermine the EU’s negotiating position.
Spain, like the other members of the EU, has an interest in the post-Brexit relationship with the UK changing as little as possible. This would require the UK staying within the European Economic Area, in what has been dubbed the Norway solution. This is not a decision that rests with Spain or the EU, however, but with the British government, which is as much divided on the question as British society and the Labour Party, although since February 2018 the latter has been advocating membership of the internal market and/or the customs union.
- At the time of writing (March 2018), and although it is not as yet definitive, it seems the May government (as aired in her three Brexit speeches: Lancaster House, Florence and Mansion House) is seeking to leave both structures of economic integration in order to control its borders, aims not to be fully subject to the decisions of the European Court of Justice, is not prepared to contribute to the EU budget and wants to have the freedom to negotiate free-trade agreements outside the Union;
In the rosiest of scenarios this leads to an ambitious free-trade deal (not unlike the Canadian one), which from an economic perspective is a bad solution for Spain because, even in the absence of tariffs, both trade in services and the movement of people will face greater difficulties than those that currently exist.
- It is therefore essential that Spanish companies prepare contingency plans for such a possibility;
- Aware that some European countries, including Spain, will suffer economic loss from Brexit, the British government has made separate approaches to the 27 remaining members for the red lines of the Commission’s negotiating position to be relaxed;
Specifically, it hopes to achieve either a Canada-type deal, but with access to the common market for its financial services industry (hence the name ‘Canada +’) or a European Economic Area-type deal, but including control over immigration (hence the name ‘Norway –’).
- In Spain’s case it has been made abundantly clear that there is no intention of undermining the Union’s common negotiating position, which revolves around the idea that the four freedoms are indivisible, and which was firmly adhered to during the first phase of the divorce negotiations, now concluded;
As Michel Barnier has pointed out, if the UK sticks to its red lines the most it can hope for is ‘Canada Dry’, namely a modern but unappetising trade deal, especially for the financial services industry. Spain should maintain this position, because its main foreign policy objective is the EU’s consolidation, entrenchment and solidity, in the form of an internal market and the rule of law under the jurisdiction of the European Court of Justice.
Jeopardising this strategic objective in order to obtain an economic advantage in relation to the UK would be a scant favour to Spain’s long-term interests, because other member states, and indeed non-member countries, such as the US and China, would be encouraged to follow the British example and seek an EU à la carte.
This does not mean, however, that it is not in Spain’s interest that Brexit should be as least damaging as possible. But as things stand this is in the hands of the British government. In fact, even though over the short to medium term London may accept the arrangements arising from the current Brexit negotiations, in the long term it may resubmit an application to join the EU, because a country of the UK’s size and historical and strategic weight is unlikely to tolerate for long a situation in which the rules of the game are decided by others.
Lastly, Brexit opens up the possibility of renegotiating the current position of Gibraltar. Although this is not the most important matter for Spain, it may be possible to take advantage of the circumstances –adopting imaginative solutions such as the one proposed in this paper– to pave the way for a new status for Gibraltar that is favourable to all the parties involved and is in accordance with what Spain considers its legitimate interests and aspirations.
Salvador Llaudes Analyst, Elcano Royal Institute | @sllaudes Ignacio Molina Senior Analyst, Elcano Royal Institute | @_ignaciomolina Miguel Otero Iglesias Senior Analyst, Elcano Royal Institute | @miotei Federico Steinberg Senior Analyst, Elcano Royal Institute | @Steinbergf.
How did Brexit affect Spain?
Economic impact The Bank of Spain has recently said that Spain’s economy is the most exposed out of all countries in the single market to the negative economic consequences of Brexit. Spanish exports to the UK ‘increased by 9 percent in 2019, equal to 3.
Can you still live in Spain after Brexit?
Can I still move to Spain now that the Brexit transition period has ended? – Yes, you can still apply for residency in Spain like other non-EU nationals. There may be preferential rules introduced for UK nationals. We will need to wait and see what is decided.
What was the relationship between England and Spain in the late 1500s?
Years of religious and political differences led up to the conflict between Catholic Spain and Protestant England. The Spanish saw England as a competitor in trade and expansion in the ‘New World’ of the Americas.
Is Gibraltar part of the UK?
Gibraltar is a British Overseas Territory. The Office of the Governor supports the Governor and Commander-in-Chief in carrying out his constitutional role and duties as Her Majesty’s Representative in Gibraltar. The Governor has special responsibilities for the conduct in Gibraltar of:
- external affairs
- internal security
- certain functions in relation to public offices
There is no formal British consular representation in Gibraltar and the local authorities deal with all requests for consular assistance.