▲ The Westside is Gibraltar’s commercial hub built on reclaimed land.
Gibraltar has transformed itself in the last four decades into a diversified, international service based economy
A British Overseas Territory located at the southern tip of the Iberian Peninsula only 14km from Morocco, Gibraltar is home to 32,000 people. Self-governed, it controls almost all its own affairs, taxation and policies. Some powers, such as defence and foreign relations, remain the responsibility of the UK. A member of the European Union since 1973, Gibraltar benefits from direct access to the huge EEA market of more than 500m people, but is exempt from the harmonisation of taxes, notably VAT.
FIGURE 1Gibraltar fact file
Source: Savills World Research
Gibraltar has transformed itself in the last four decades from Ministry of Defence outpost to a diversified, international service based economy. GDP has been growing at 10% per annum, in nominal terms, since 2010. Economic growth never dipped below 5% in recent times, even at the depths of the global recession.
This puts its growth rate among the highest of the OECD countries. Growth has been supported by four pillars of industry: remote gambling, financial services, tourism and marine services. Together they account for 70% of Gibraltar’s GDP (Figure 2). Public debt is low, and falling, standing at 22.8% of GDP in 2015, while a budget surplus was recorded in the 2014/15 financial year.
FIGURE 2Four pillars of the economy: Together contribute 70% of Gibraltar's GDP
For centuries the Ministry of Defence and military base had been the main source of employment for Gibraltar, but today are a very small component of the economy. MOD operations now account for less than 600 jobs, a decline offset by the growth of higher value employment sectors. This, in turn, has transformed Gibraltar’s prime residential markets (see Gibraltar's Property Markets). Employment grew 16.4% between October 2010 and October 2014, reaching a record high of 24,422.
The number of jobs in Gibraltar’s remote gambling sector increased from just 542 in 2002, to a high of 3,276 in 2014, making it a larger employer than the financial services sector, which recorded 2,051 in 2014 (see Figure 3). Ladbrokes, William Hill, Gala Coral, Bwin.Party and BetVictor all run their online operations from the territory, taking advantage of Gibraltar’s legislative environment and favourable tax regime. Recognised as a well regulated centre of excellence in the gaming sector, local expertise and established infrastructure continue to support expansion. The sector showed resilience when the UK introduced a point of consumption tax for UK online gamblers and has remained committed to the territory.
Gibraltar is a compliant British, EU financial services centre, specialising in insurance, private clients and asset management. Around 20% of UK motor insurance is underwritten in Gibraltar. It ranks 56th in the world in the latest Global Financial Centres Index, above competing centres that include the Isle of Man, Liechtenstein and Monaco. Gibraltar offers competitive tax rates, agile regulation and favourable infrastructure. NatWest, SG Hambros, Jyske Bank and Lombard Odier all have local offices.
Gibraltar is an important centre of employment across the broader region. Some 9,400 ‘frontier workers’ commute across the border to work in Gibraltar each day. Many take advantage of the lower cost of property in Spain.
The development of local talent is supported by a quality education system. Loreto Convent, a private school, will be joined by Prior Park Gibraltar, a sister school to Prior Park Bath when it opens in September 2016. All schools follow the UK curriculum and the tuition fees of local students attending university in the UK are paid by the Gibraltar government. Gibraltar’s own university opened in 2015, offering University of London affiliated business degrees, among other courses.
FIGURE 3Job growth (selected sectors)
Source: Gibraltar Statistics Office
Gibraltar’s strategic position at the gateway to the Mediterranean historically made it of huge military 2016 importance. Today, this position brings commercial advantages. The Port of Gibraltar is the most important in the Mediterranean for ‘bunkering’, the refuelling and supplying of ships, in turn making petroleum Gibraltar’s largest physical export. A major cruise ship destination, some 228 vessels are expected in 2016 with a total of 342,000 passengers, a 16% increase over 2015.
Gibraltar International Airport puts major UK cities within direct reach, including services to London’s Heathrow, and also offers flights to Moroccan destinations. One of the world’s most iconic airports, its runway extends into the sea and is intersected by the main road between Gibraltar and the mainland, a memorable entry point for those arriving by both land and air. Malaga airport, a few hours’ drive away, offers direct flights to global destinations including Amsterdam, Geneva, Moscow and New York.
Gibraltar’s location on the southernmost tip of the Iberian Peninsula grants it direct road access to mainland Europe. Several of Spain’s most popular enclaves are within driving distance of Gibraltar, including Sotogrande, Marbella, Seville and Malaga, Spanish national parks and numerous golf courses. Many of those with homes in Gibraltar also have second homes in Spain.