The Parliamentarian 2016 Issue Three

Page 27

THE POTENTIAL IMPLICATIONS OF BREXIT FOR THE FALKLAND ISLANDS

“Generally held to be the most important area of interaction between the Islands and the EU is that of trade and economic integration. There are a range of both financial and economic implications for the Islands. These impact both the Government in fiscal terms and also the local private and third sectors.”

within the UK mainland itself. This article shall run through those by theme. Financial and Economic Implications Generally held to be the most important area of interaction between the Islands and the EU is that of trade and economic integration. There are a range of both financial and economic implications for the Islands. These impact both the Government in fiscal terms and also the local private and third sectors. Firstly, the decision to leave the EU has led to short-term fluctuations in the currency and financial markets, which have impacted the Islands both positively (in terms of exports sold in USD) and negatively (in terms of financial reserves invested in the FTSE AllShare). The overarching impact of these fluctuations and economic uncertainty is difficult to assess immediately, but there is little

doubt that it makes financial planning considerably more difficult. In addition, the Islands currently have quota- and tarifffree access to the EU single market for both exports and imports. As the OAD recognises, the EU is the “principle trading partner of the OCTs”. This is especially true for the Falkland Islands. The Islands generated an annual GDP of c. £175m in 2014 (Falkland Islands Government Policy Unit), with c. 50% of that dependent commodity exports such as fish, meat and wool. Nearly 70% of all of those exports end up in the EU single market. Clearly such trading arrangements work well for the Islands and its industry, but they also result in good quality products being provided into the EU in areas where they do not produce sufficient quantities internally. For example, much of the calamari so loved in Spain and Italy will

Above: Jetty used by visitors arriving by sea in Stanley, capital of the Falkland Islands.

have originated in Falkland Islands’ waters. There are some direct transfers of funds from the EU into the Falkland Islands – totalling 7.5 million euros over recent rounds of the European Development Fund. Whilst direct transfers are considerably smaller and of less concern than the existing trade arrangements, the financing received from the EU plays a key supporting role in the Islands and has contributed to major infrastructure projects such as rural communications networks (roads and an interIsland ferry service). Indirect transfers also exist, particularly to environmental NGOs that operate in the Islands and the region generally. These are of considerable importance and will roughly be double

The Parliamentarian | 2016: Issue Three | 217