John Downing: Why EU-UK deal on Gibraltar is also good news for Ireland
Gibraltar is a British Overseas Territory, but it was among the European Union's forerunners, along with the UK, in January 1973. In June 2016, 96pc of Gibraltarians voted against Brexit, but the territory's 30,000 people were unhappily dragged from the EU, due to the 52pc overall UK vote to quit.
My experience in Gibraltar led me to ponder its fate from 2016 onwards, which had parallels with Northern Ireland. My spell there was in autumn 1988, covering a long inquest into the killing of three IRA members who were planning to bomb a British military parade. They should have been arrested, as subsequent inquiries definitively established, but all of that is for another day.
Feelings were running very high as many bars frequented by British soldiers, sailors and airmen were off limits to me and colleagues, and I did not often disport my Irish accent, deeming silence wiser.
However, the weeks did soften the atmosphere, and we soon learned that the native Gibraltarians, Spanish-speakers with a Catholic background, were the ultimate pragmatists, with their main focus on the commercial opportunities that abound in the region.
This deal will protect future generations of British Gibraltarians and does not in any way affect our British sovereignty
Thoughts of Gibraltar returned this week as news broke of an EU-UK deal that ended all but a decade in limbo for 'The Rock'.
Like last month's EU-UK reset framework trade deal, which brought good news for Ireland, there were predictable cries of 'Brexit sellout' and 'betrayal of Gibraltar' from diehard Brexiteers in UK Reform and the Conservative Party.
Never knowingly undersold on Brexit rhetoric, the Daily Mail thundered about disloyalty to Gibraltar, which had held the British front line over the Mediterranean for 300 years. By contrast, Gibraltar's head of government, First Minister Fabian Picardo, hailed the EU-UK compromise, saying it would bring stability and certainty for business.
'This deal will protect future generations of British Gibraltarians and does not in any way affect our British sovereignty,' he told the venerable newspaper, the Gibraltar Chronicle, which has been publishing continuously since 1801.
As with Ireland, this EU-UK Gibraltar deal aims to avoid a hard border, this time with Spain, which is crucial to the local economy. Central to the deal is Gibraltar's abandonment of its Vat-free rules, as demanded by Madrid, and a new 'transaction tax' bringing a higher rate of import duty.
There will be no systematic identity checks on the Gibraltar-Spain border, but there is controversy around Spanish police doing checks inside Gibraltar at its airport and port.
This has been the focus of Brexiteer ire amid allegations of 'sovereignty sellout'.
But all sides point to the need to facilitate the estimated 15,000 workers who cross each day in both directions for work and business, and there is now hope that there will be no return to long delays due to identity checks.
I am overdue a return to Gibraltar, and I remember affectionately the Irish links with the place, such as the school where the Christian Brothers taught
The Spanish police presence in Gibraltar mirrors the presence of French personnel at London's St Pancras Eurostar train station and other arrangements such as US personnel at Dublin and Shannon Airports.
Yet it will remain emotive for some as Gibraltar Airport is also an RAF base.
I am overdue a return to Gibraltar, and I remember affectionately the Irish links with the place, such as the school where the Christian Brothers taught for many years and the Alameda Gardens, which feature in Joyce's Ulysses.
I was surprised to learn there that Ireland's most celebrated fictional heroine, Molly Bloom, was, the story goes, born in Gibraltar.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RTÉ News
38 minutes ago
- RTÉ News
Trump orders tariffs on dozens of countries
US President Donald Trump ordered the reimposition of tariffs on dozens of trading partners - his cornerstone strategy for reshaping global trade to benefit the US economy. However, in a minor reprieve, the White House said the measures will take effect next Friday, a week later than expected. The tariffs are a demonstration of raw economic power that Mr Trump says will put US exporters in a stronger position while encouraging domestic manufacturing by keeping out imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. And with questions hanging over the effectiveness of bilateral trade deals already struck - including by the European Union and Japan - the outcome of Mr Trump's plan remained uncertain. His new measures in an executive order raised duties on dozens of economies up to a 41% rate. Most of these new tariff hikes were first announced in April when Mr Trump put a minimum 10% levy on goods from almost every country in the world, citing unfair trade practices and US deficits. However, Washington then postponed implementation, amid frantic series of negotiations, alongside announcements of new duties and deals with some partners. The President yesterday announced he was delaying a tariff hike on products from the major US trading partner Mexico. The postponement by 90 days came after talks with his counterpart Claudia Sheinbaum. The 79-year-old Republican has made tariffs core to his protectionist brand of hard-right politics. Mr Sheinbaum claimed that the US economy had "no chance of survival or success" without tariffs. But the latest salvo came amid legal challenges against Mr Trump's use of emergency economic powers. The US Court of Appeals for the Federal Circuit heard arguments in cases brought against Mr Trump's blanket tariffs targeting different countries. And questions linger over the effectiveness of his grand plans, or even whether he will hold firm on his most drastic threats. While Mr Trump has touted a surge in customs revenues since the start of the year, economists warn the duties could fuel inflation. Proponents of his policy argue that their impact will be one-off, but analysts are awaiting further economic data to gauge for more persistent effects.
Irish Examiner
4 hours ago
- Irish Examiner
Minister wants to see 9% Vat rate on energy maintained in budget
The lower 9% Vat rate on gas and electricity should be retained in the upcoming budget to avoid further hiking energy prices for consumers, energy minister Darragh O'Brien has said. The lower rate was originally introduced in 2022 as part of a major cost-of-living package from the Government, with Vat falling from 13.5% to 9%. Speaking yesterday, Mr O'Brien said the reduction in the Vat rate was a 'very important' measure on affordability, and he wanted to see it extended into 2026. However, he said any decision to retain the rate would be made as part of the budget process. The Tax Strategy Group has estimated the total cost of retaining the lower Vat rate is €193.3m — €58.2m for gas and €140.1m for electricity. In previous years, the cut has been extended six months at a time, with the most recent extension coming in April. Each six-month extension has provided estimated savings of €26.60 on electricity and €20.28 on gas for consumers for the duration of the period. Price increases The modest savings have been dwarfed, however, by price increases introduced by the major utility companies. A number of energy providers have again opted to increase their rates in recent months, with Flogas confirming a hike in variable electricity charges by 7% from next month. This is expected to increase bills for Flogas electricity customers by €126 annually. In April, SSE Airtricity hiked electricity bills by 10.5% and gas bills by 8.4%, the latest in a spate of increases since the Russian invasion of Ukraine. Mr O'Brien said the prices for energy have 'levelled off' after a spate of surges in recent years, but conceded that Ireland's energy costs remain too high. Households here pay nearly 30% more for electricity than the EU average, costing approximately €350 more annually. Gas prices are approximately 10% above the EU average. Irish householders are paying the third-most expensive prices for electricity in Europe, behind only Germany and Denmark. The Dáil has heard that there are more than 300,000 people in arrears on their electricity bills, while more than 175,000 are in arrears on their gas bills. The minister for energy said this increase was a matter for concern, and anyone in arrears should enter into an arrangement with their provider. Energy Affordability Taskforce Mr O'Brien met with the recently-established Energy Affordability Taskforce on Thursday, and said an interim report would be provided to the Cabinet ahead of the budget in October. However, he ruled out the prospect of energy credits making a return, saying there was a very significant cost associated with the measure. 'That was €3.5bn and that was in the teeth of the cost-of-living crisis, particularly post the outbreak of the war in Ukraine,' Mr O'Brien said. He said the costs for one-off payments were very significant, and reduced the amount of money the Government could funnel into medium- and long-term measures to make energy more affordable.
Irish Examiner
4 hours ago
- Irish Examiner
Reducing Vat rate a blunt and costly policy instrument for hospitality
Less than a week on from its publication, one of the fundamental assumptions underpinning the summer economic statement has changed with the agreement of the EU-US trade deal. This will have implications for October's budget and a potential reduction in the overall budgetary package outlined by the Government just a week ago. Of the total budget package detailed in the summer economic statement, €1.5bn has been allocated to a "tax package". The Government identifies the narrowness of Ireland's tax base as a cause of concern in the summer economic statement, noting that income tax, corporation tax, and revenue make up the bulk of Ireland's tax base. At a time of heightened global economic uncertainty, increased tariffs for Irish exporters, a growing and ageing population, increasing demand for and pressure on services, a further narrowing of Ireland's tax base in the budget would seem at odds with the programme for government commitment to maintain a broad tax base "to guard against the need for counter-cyclical fiscal policy in the event of a downturn" and prepare for demographic change. Much of the subsequent discussion on the so-called "tax package" has been the commitment in the programme for government to support the hospitality sector through changes to Vat and its implications in terms of the space available for any income tax changes in the budget. According to the Department of Finance, a reduction in the Vat rate for the hospitality sector to 9% would cost almost €900m a year This discussion fails to look at the broader context, the impact to date of "tax packages" introduced by the previous government from 2020-2025, and the precariousness of Ireland's tax base. Looking at budgetary policy of the last government, income gaps have opened up between working households, and the gap between people and households at the bottom and middle of the income distribution and those at the top has grown. This has been driven by the skewed nature of income tax reduction choices which prioritised higher earners and provided relatively little to low income workers paying income tax at the standard rate. This was further compounded by the concentration of temporary cost-of-living measures among lower income households, supports that will fade away. The tax packages contained in those budgets are permanent, costly, and have not reached those working households who have been most impacted by rising costs. Ireland's tax base is narrow, dominated by three revenue streams, and our over exposure in terms of corporation tax is a major concern Rather than looking at how to build a broad and sustainable tax base, recent discussion has focused on the "tax package", the cost of the aforementioned Vat reduction for the hospitality sector, which would narrow Ireland's tax base further, and how much this would leave for an "income tax package" which — if modelled on previous budgetary policy — will see the income gaps between working households grow further. Softening demand Looking at Vat, it accounted for 23% of Ireland's total tax revenue last year. At present, the hospitality sector is subject to the reduced 13.5% Vat rate. The sector was subject to the lower rate of 9% from 2011 to 2018, and again from late 2020 to mid-2023 at an estimated cost of €3.6bn. The sector has identified high energy costs, softening demand, labour market challenges, increased cost of inputs, and a lack of hotel capacity as the main challenges facing the industry and the rationale for a return to the 9% VAT rate. However, a recent Department of Finance examination of the Vat reduction for the hospitality sector since 2011 concluded that the reduction was not always passed on to customers in the form of lower prices, it was highly regressive in that it benefitted higher income households more than lower income households, and it was very costly. It is clear that parts of the hospitality sector are under significant pressure, but other parts of it are doing very well Reducing the Vat rate is a very blunt and costly policy instrument. It will not lower energy costs, it will not increase demand, nor will it address the challenge of full employment or produce more hotel capacity — the very issues that the sector itself has identified as major challenges. The Government and the sector must look at other available sustainable measures to support the industry, including measures used in other EU member states to support hospitality and tourism. Calls for new tax breaks, or the return of old ones, are a feature of most periods of economic and social recovery. However, their provision involves great cost to the State and the unequal allocation of these resources to small groups of beneficiaries. Few of these initiatives have proven to be worthwhile in the past — in particular the opportunity cost of using the revenue in a better way is frequently overlooked. As the first of the kites are flown in advance of Budget 2026, the Government should turn its attention to those who have been most impacted by persistent rising prices, and use the resources available to ensure that vulnerable households are protected and supported through adequate social welfare rates, and that growing income gaps between working households are closed. It must deliver on the commitment to progressive budgets and build a broad and sustainable revenue base that can meet the needs of a growing and ageing population This requires developing progressive policies and measures in a fair taxation system, and working with the hospitality sector to identify sustainable ways to fund the maintenance of the hospitality and tourism industry. A reduction in Vat for the hospitality sector is costly and it won't address the challenges the sector faces. It didn't address these core issues in the 124 months that it was applied between 2011 and 2023, and there is no evidence to suggest that it will do so if applied again in Budget 2026. Michelle Murphy is a research and policy analyst at Social Justice Ireland
