#EmbraceSpain XXIX: Pragmatism as a solution to Brexit

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#EmbraceSpain XXIX: Pragmatism as a solution to Brexit

Businessmen and representatives of British and Spanish institutions agree that pragmatism is the best option for successful Brexit negotiations.

At Del Canto Chambers we are back from the Easter break with a vortex of activity. Our Firm participated in the event #EmbraceLondon, the editorial breakfast we organized in London together with the Spanish newspaper El País, which gathered businessmen and representatives of UK and Spanish institutions.

The event focused on #Brexit and its consequences for trade and the free movement of goods and people between the UK and Spain. “Pragmatism” was the preferred the solution for all attendees.

In this sense, Leon Fernando del Canto, emphasizes that “the ties between both countries are also fundamental for what Spain means for the United Kingdom in terms of expansion in Latin America, and what the United Kingdom means for Spain as a bridge to Asia, The Middle East and other emerging communities”, and points out that “trade ties between the two countries were already strong before Spain joined the EU in 1986.”

At the breakfast we had the honor of having Andrew Parmley, and Peter Estlin, Lord Mayor and Sheriff of the City of London respectively; Javier San Basilio, president of the Spanish Chamber of Commerce in Great Britain; Julio Crespo MacLennan, director of the Instituto Cervantes in London; Javier de Cendra, dean of IE Law School; Giole de Carmalinghi, Area Director of Melià Hotels International; and Sarah Lucy Cooper, Barrister and specialist in international family law.

Lord Mayor also pointed out that “there is a large number of Spaniards living in the United Kingdom, most in London, about 79,000 working or studying, 33% of them working in the banking sector and 21% in accounting, the leading industries of the City of London. There is a source of talent here that we need to keep attracting: certainty is what these people living and working here need “; he concluded by mentioning three key principles that should predominate in this process and which from Canto Chambers we also advocate for: “Pragmatism, mutualism and certainty.”

This informative breakfast was covered by the Spanish newspaper El País that dedicated an article on Thursday in the Economy section, and also from our blog, by our lawyer Julio Prieto. In addition, the supplement Negocios (Business) of El País will publish this weekend a broad article about the matters discussed at the breakfast.

The UK is certainly setting the agenda for Brexit. Its prime minister, Theresa May, has convened advanced general elections for June 8 to strengthen her internal negotiating position. The date coincides with that planned for King Philip VI visit to the UK, which will most likely be affected again.

To mitigate the uncertainty of the Brexit effect on the Spaniards residing in the UK, the Spanish Embassy held an informative meeting, and opened a one-stop shop to solve the doubts Spanish residents have about residence permits due to Brexit.

On a positive note, the UK economy has not been adversely affected (and has even seen its growth forecasts increased by the IMF) and the latest data on indicators such as business confidence in the real estate sector and venture capital investments show an increase, while inflation is stabilized, although housing prices are rising, except in London.

As per taxes, the government has announced public aids for vehicle owners in relation to anti-pollution taxes, although it faces a controversy over taxes on waste, known as tip taxes, and over the changes on real estate purchase taxation.

On the other hand, in Spain, banks keep avoiding their obligation to pay land clauses back, breaching, in this way, the extrajudicial procedure specifically created by the government last January, as explained by our lawyer Claudio Rodríguez Vera.  A nightmare that affect the British residents in Spain as well, as shown in our analysis.

And if that was not enough, the Spanish Supreme Court has decided not to review the final rulings on land clauses prior to 2013, while there is still a lack of consensus on mortgage payments. At the same time, it is announced that the expected reform of the mortgage law will focus on consumer protection, while mortgage interests are rising.

The Spanish economy is going through a good time.  In our blog we highlight the fact that economy is reaching pre-crisis growth levels thanks to sectors such as tourism, which has helped Spain lead the world raking of tourism competitiveness. On this topic,  we have published in our blog an analysis on the reform proposal to be discussed by the government of the Balearic Islands with regards to tourist rental properties in the Balearic archipelago.

And to close with Qatar, the International Monetary Fund has approved the exchange rate set by the government. The national GDP has grown by 4.1% and inflation only rose nine tenths. On the other hand, the Qatari tourism sector is consolidated as the second most competitive in the Gulf region.

At a tax level, Qatar is getting ready for the introduction of the so-called ‘selective tax’, a luxury goods tax that will have the same rate for all Middle East countries and has already been approved in Saudi Arabia. In addition, the Qatari government is also finalizing a new commodity subsidies law, while strengthening bilateral trade relations with countries such as Turkey and Poland.

In conclusion, the reinforcement of bilateral relations (both commercial and cultural) between the UK and its European partners (Spain among them) is very important to solve the change Brexit involves. Pragmatism is then the best solution for an orderly exit from the EU, which is beneficial to all parties.

You can follow our opinion on the development of these events and those of the international tax time in our blog and in our social networks like Twitter, Facebook and Linkedin.

Xavier Nova (@xavinova)

Director of Del Canto Chambers