Brexit and the Isle of Man
12 July 2016
On Thursday 23rd June the UK voted to leave the European Union (EU). Since then the UK has seen significant political and economic change as the country adjusts to the decision and moves towards exiting the EU.
The implications of the vote are not yet certain for the Isle of Man. However, following two interim reports pre-referendum, the Island is confident that its economic strength and diversification holds it in good stead to face the changes and challenges ahead.
- On resignation, David Cameron MP stated that Article 50, the UK’s formal notification of leaving the EU, will not be triggered until a new Prime Minister is in post. With Theresa May MP now in office the UK will be waiting for the next steps.
- The UK Government has two years to negotiate its withdrawal agreement. It will also have to negotiate a new relationship with the EU and potentially re-negotiate many trade agreements with non-EU countries.
- The models for a new UK/EU relationship range from participation in the European Economic Area (and full participation in the Single Market) to bilateral agreements (either a series of bespoke agreements on the particular sectors, customs union, or a free trade agreement) or reliance on World Trade Organisation rules.
- The Isle of Man is not included within the UK’s membership of the EU. The Island’s limited relationship with the EU is set out in Protocol 3 and allows for the free trade in goods. When the UK finally leaves the EU, Protocol Three will fall away and a new relationship will need to be established.
Impact on the Isle of Man
- The Isle of Man’s relationship with the UK is not affected.
- The Isle of Man’s relationship with the EU will be determined by the UK’s new relationship.
- The EU’s financial services ‘passport’ means that financial services firms authorised in the UK can provide their services across the EU, without the need for further authorisations. The passport does not currently apply to businesses established in the Isle of Man as it is categorised as a third country. This means that financial services will be largely unaffected by the UK’s decision to leave the EU.
- The Government has already been active in promoting awareness of the Isle of Man’s position, and in gathering information and intelligence both on and off the Island producing two reports ahead of the referendum. The first and second reports outline the effects and potential courses of action in more detail.
- The full impact of the UK leaving the EU, on both the UK itself and Isle of Man, may not be known for many years.
What’s next for the Isle of Man
- In a letter published on 28th June the Isle of Man along with fellow Crown Dependencies Jersey and Guernsey, said they wished to "retain the status quo" regarding their relationship with the EU, in particular concerning the Protocol 3 arrangement.
- The Isle of Man Government will be working closely with the UK Government to ensure the best outcome for the Island’s businesses and residents.
- The Isle of Man has established a high level government working group to assess implications for the Island in the ongoing negotiations with the UK and the EU.
- The Island is holding its General Election on 22nd September this year, with the Chief Minister appointed shortly after. Work is being undertaken this summer to ensure the smooth crossover of information between parliaments.
- In the longer term, the Isle of Man is confident in the continued economic growth and development on the Island. The Department of Economic Development will be revisiting existing strategies to ensure that the Island’s businesses continue to thrive with the right legislation, resources and support from the Government.