Chief Minister Fabian Picardo said the Gibraltar Government will forecast a £2.5m budget surplus for the 2023/4 financial year, insisting his administration had “restored financial stability” years ahead of initial predictions as Gibraltar heads toward “another Brexit election”.
In a speech to the annual dinner of the Chamber of Commerce on Tuesday night, the first since the Covid-19 pandemic, Mr Picardo defended his government’s handling of Brexit and said a treaty for the Rock’s future outside the EU was “almost there”.
The Chief Minister told business leaders gathered at the dinner that the economy was growing despite the uncertainty of recent years and the impact of the war in Ukraine and the cost-of-living crisis.
And he said too that Gibraltar was recovering without the need for austerity measures of the type seen in other countries, including three-fold hikes in the price of electricity.
Mr Picardo’s headline message in a speech delivered with an eye on the forthcoming general election was about economic recovery.
Mr Picardo said the government had already signalled that the £50m deficit initially forecast for the 2022/23 financial year had been reduced to a £15m deficit.
And he signalled the government’s assessment of further improvement moving ahead.
“I know that we haven't done everything right,” he said.
“I don't pretend that we do everything right.”
“But with the right advice, [from] Albert [Mena] and Charles [Santos] in particular, both in the driving seats as Financial Secretaries, with the right commitment to productivity, the right commitment to value for money, ensuring that we don't stray into austerity and keeping the ship straight this year, we have already restored financial stability.”
“We will be predicting an estimated £2.5 million surplus for the end of this financial year, years ahead of what we believed it was possible. Years ahead.”
“That is down to you, to your work, to the taxes that you pay, which are the revenue that the government receives, and to what I believe is our prudent financial management of the economy.”
“So from £50 million in the red to £15 million in the red, [and] from £15 million in the red to £2.5 million in the black, without increasing electricity charges, without making the most of the mortgage interest rises that we could have made the most of, without austerity in the health service, listening to the right advice and not to the siren calls of those who really are just looking to make political points.”
Mr Picardo reflected on the Brexit process since 2016 and how his government, working with the UK, had ensured Gibraltar’s inclusion in the Withdrawal Agreement and the transition period it put in place.
He had faced being left out of that agreement and that this factor was often missed in the current debate on Brexit and the treaty.
“No one would have stayed to do business in Gibraltar if we were the only two and a half square miles of the continent of Europe that did not have a transitional arrangement of the UK's withdrawal from the EU,” he said.
“That was the danger.”
Looking ahead, Mr Picardo said “we are almost there now” in the negotiation between the UK – with Gibraltar – and the EU for a treaty on the Rock’s future relations with the bloc.
And he reminded guests at the dinner that the negotiation on that treaty had commenced “as recently as October 2021”, even if it felt the process had been dragging on for years.
He said the goodwill and combined efforts of the UK, Gibraltar, Spain and Brussels had ensured that, despite the upheaval of Brexit and Covid, there was continued fluidity at the border.
He acknowledged the difficulties faced by Blue ID card holders – “we’re trying to fix it” – but said Gibraltar had more fluidity at the border now than when it was in the EU and the hawkish Jose Manuel Garcia-Margallo was Spain’s Foreign Minister.
“I think that as we go into this general election period, when people try to tell you that I'm running the same arguments I ran in 2019, you'll be too clever to be taken in,” he said.
“If people try to tell you that there is uncertainty, you'll say, of course there is, but there's perhaps less uncertainty than one might have imagined.”
The Chief Minister said negotiators were “close enough that we could taste that treaty already” but that the snap election in Spain on July 23 had impacted the timeline, making it possible that Gibraltar would not yet have a treaty when it heads to the polls later this year.
“So this is going to be, of course, another Brexit election,” he said.
“But let’s realise that we have no alternative but for this to be a Brexit election.”
Mr Picardo, who told guests now was not the time to change “the lead poker player” at the table, said the government was listening to business sectors impacted by the uncertainty of the recent years.
But he added too that key sectors such as gaming and financial services continued to grow, highlighting 13 new gaming companies applying for licenses in the last 12 months alone.
He said the Gibraltar Government had shielded businesses and taxpayers from the worst impacts of the cost-of-living crisis, for example through minimal increases in utility rates compared to what was happening in other countries.
Gibraltar had increased electricity prices by 8%, compared to 300% in Spain, and had avoided the types of increases in the UK that had left people faced with the stark choice of “heat or eat”.
And where the government had overspent its budget, it was demand-led, for example in the GHA and the provision of healthcare, the Chief Minister told guests at the dinner.
While Gibraltar must always work improve productivity and efficiency, Mr Picardo said he would not “take lessons on value for money” from the GSD, citing the £60m overspend on the airport, the £10m on “the hole previously known as the Theatre Royal” and the £7m loan to a developer that was later “lost”.
His government “will not introduce austerity”, he said, while cautioning the business leaders gathered at the dinner that their interests must also be balanced against those of workers.
“We have to balance the interests not just of your businesses, the engines of our economy and the engines of growth, but also the interests of other actors in our economy,” he said.
“And believe me, that balance is not an easy one to do.”
Mr Picardo said he believed his government had achieved that balance, citing as an example the package of measures put in place during Covid to ensure businesses could emerge from the pandemic and continue trading.
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He, FP is just electioneering as it is that time again before the year end vote, and he forgot to mention this.