#EmbraceSpain XII: Converting Brexit into stimulus

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#EmbraceSpain XII: Converting Brexit into stimulus

The UK is preparing to reconfigure its role as a political power because of the internal and external challenges of Brexit.

Maintaining trade links with the United Kingdom is one of the objectives Spain should not ignore. Regarding this topic, we launched our campaign #EmbraceSpain: to help strengthen our economic and historical ties, despite the uncertainty caused by Brexit.

The transition of Britain’s exit from the EU will mark 2017. Brexit undoubtedly has political and economic implications not only for the United Kingdom but also for Spain, other European countries and the rest of the international community.

Focusing only on the figures, trade between the UK and Spain currently totals 47,000 million euros, with Spain being one of the main destinations for the British goods and services market.

Last Wednesday, we participated in an executive breakfast organized by Executive Forum with Lord Price, Secretary of State for Commerce of the United Kingdom, and Simon Manley, the United Kingdom’s ambassador to Spain, attended by both Spanish and British entrepreneurs, politicians and diplomats.

Lord Price made it very clear that the United Kingdom has always – and will continue to – push for free global trade, away from the bureaucracy and excessive protectionism of the EU. Price shared his wish that “the United Kingdom and Spain” could “continue to be important partners” because “trade builds trust, confidence fosters peace, peace brings prosperity and from prosperity we all benefit.”

The complexity of the negotiations with Brussels makes it unlikely that London will effectively be out of the Union in two years, once it activates Article 50 of the TEU. That is why the House of Lords argued in a report for a transitional agreement with the EU; a request that is in line with those of the soft Brexit which Chancellor of the Treasury, Philip Hammond (among others) defends.

London will have to reconfigure its diplomacy as a power, with Europe but also with countries in the Middle East; its internal policy, especially with its territories such as Gibraltar (which voted by majority to remain in the EU) and, in the legal framework, its tax system, as explained by our Managing Partner, Leon Fernando del Canto in an article in the Tax Precision blog.

The key is to keep the pulse of the City of London. British companies are worried about losing the “European passport”, which is essential to trade with the EU single market, while some countries are moving to attract business and capital from this important financial center. However, it will not be easy, as it seems that Brexit has not affected the City: jobs increased by 6% in November and office occupancy was at 118%.

The United Kingdom retains enormous geopolitical and commercial interests with the Gulf countries; a region in which it played great political importance during the twentieth century.

These nations are leaving behind their traditional energy dependence on oil and diversifying their economies.

These changes include tax structures and regulations, as our managing partner at Tax Precision writes. In the case of Qatar, it has just changed its labor legislation from traditional kafala or sponsorship to a contractual system. In addition, non-oil Qatari state revenues amounted to 7.8%.

Tax changes are also occurring in Europe, especially in fraud and compliance for companies. Thus, in Spear’s magazine, Leon Fernando del Canto, has advocated the application of universal jurisdiction for international prosecution of tax evaders and the consensus among the profession for fiscal consulting of ethical codes and conduct to avoid fraud.

As for our firm, this week we attended together with Isabel Mastrodoménico, director of the Communication and Gender Agency, New Economy Forum’s awards ceremony – a gala attended by political figures such as the president of Colombia, Juan Manuel Santos (who received the prize for Economic Development and Social Cohesion 2016), and the president of the government, Mariano Rajoy.

Also, courtesy of Editorial Debate, we attended the presentation of the book “First Page“, the first volume of the memoirs of journalist and communications entrepreneur Juan Luis Cebrián; an account of the end of the dictatorship and of the Transition to democracy told from the point of view of a journalist without whom we would not know so much as to the development of our country. This is exemplified in the newspaper “El País“, as the journalistic symbol of a particular era.

On Thursday, we participated in the Christmas cocktail organized by the Chamber of Commerce of the United Kingdom (BCC), which was attended by Chamber members along with Catalan and British entrepreneurs based in Barcelona. The event was attended by Simon Manley, UK Ambassador to Spain, Lloyd Milen, UK Consul in Spain and Christopher Dottie, President of the BCC. In a relaxed atmosphere, it was reiterated how the UK is committed to global free trade as a driver of the economy, prosperity and well-being of countries.

Spain and the United Kingdom have a great future together and it is in our hands to make Brexit an incentive to reinforce, not destroy, our cultural and economic ties. A purpose that we add to via our blog and social media networks, such as Twitter and Linkedin.

Xavier Nova (@xavinova)

Director of Del Canto Chambers