Spain to press for joint sovereignty of Gibraltar following Brexit vote

'I want to be absolutely clear. The United Kingdom will continue to stand beside Gibraltar,' British minister says in first diplomatic spat following Brexit vote

Friday 24 June 2016 10:34 BST

Spanish minister talks of the 'Spanish flag on the Rock' being closer than ever (Getty)

Spain is to press for joint sovereignty of Gibraltar with the UK following the Brexit vote in the referendum.

Acting foreign minister Jose Manuel Garcia-Margallo expressed his hope that “the Spanish flag on the Rock” was now “much closer” to reality.

Gibraltar’s cabinet was holding a crisis meeting to discuss the implications of the vote with Fabien Picardo, the Chief Minister, due to address its parliament at 2pm UK time today.

Madrid has threatened to close its border with the tiny enclave once the UK leaves the European Union, something it has been prevented from doing by EU rules in the past.

Acting foreign minister Jose Manuel Garcia-Margallo made clear in a radio interview that he believed the Brexit vote could prove decisive for his country’s claim to Gibraltar, which was ceded to Britain in 1713.

“It’s a complete change of outlook that opens up new possibilities on Gibraltar not seen for a very long time,” he said.

“I hope the formula of co-sovereignty – to be clear, the Spanish flag on the Rock – is much closer than before.”

6 ways Britain leaving the EU will affect you

Show all 6

1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

nito100

6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

Getty

6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

AFP/Getty Images

6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

Getty

6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

AFP/Getty Images

6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

Getty Images

Nearly 99 per cent of Gibraltarians rejected the idea of co-sovereignty with Spain in a referendum on the idea in 2002.

A well-placed Gibraltar source said he had “no doubt at all” that the peninsula’s government would continue to oppose co-sovereignty.

In a statement, David Lidington, the UK Minister for Europe, said: “I want to be absolutely clear. The United Kingdom will continue to stand beside Gibraltar.

“We will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another State against your wishes.

“Furthermore, the UK will not enter into a process of sovereignty negotiations with which Gibraltar is not content.”

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies