Maltese business landscape keeps close eye on Brexit

Malta’s business landscape keeps a close eye on today’s vote in the British Parliament, as ambiguity around Brexit maintains international uncertainty in sectors and among market players. Panellists at the seminar “Brexit – A Financial Markets / FX Perspective” organised by the Malta Business Bureau (MBB) in collaboration with Bank of Valletta (BOV) appeared to hold slightly positive outlook while raising caution for a possible “no-deal” scenario’s unforeseeable consequences.

“A no-deal Brexit seems to have become the only true option at this stage. The votes, which Prime Minister May has announced and which will take place in the House of Commons this week, may change this and give some more certainty on the chosen path forward,” said Frank V. Farrugia, President of the Malta Chamber of Commerce, Enterprise and Industry, in his opening address, according to a press statement by Bank of Valletta.

“However, given the circumstances, it is now our duty to stand foursquare by our members and businesses to support them through these challenging times ahead,” Mr Farrugia added.

While some economic sectors within the European Union and some EU member states will be more exposed than others, from a macroeconomic level, Brexit is mostly a British problem with a risk of contagion close to zero, according to keynote speaker Christopher Dembik, Head of Macroeconomic Analysis at Saxo Bank, the BOV press statement reports. Mr Dembik said that probability of a delayed Brexit and a new referendum is high; however, he believes that the main worry is the lack of new credit growth, which is the United Kingdom’s top issue for medium and long-term macroeconomic output.

Due to the massively uncertain nature of Brexit, not only preparing for it is difficult but even discussing it, said Tony Zahra, President of the Malta Hotels and Restaurant Association, when concluding the event. Mr Zahra reminded that 29 March is close and he hopes that a deal is reached before then, because he sees the consequence of a “No deal Brexit” is “too disastrous to even entertain”, the BOV press statement says.

Joe Tanti, CEO of MBB, who chaired the event, encouraged the EU institutions to assist businesses in addressing the current uncertainty due to Brexit and urged EU member states to uphold the integrity of the Single Market in spite of the populist political climate, according to the press release

The Malta Business Bureau is the EU-business advisory office of the Malta Chamber of Commerce, Enterprise and Industry, and the Malta Hotels and Restaurants Association.

UK Parliament votes today

Today the UK Parliament votes on Prime Minister Theresa May’s revised Brexit deal. The vote is widely described as the meaningful vote two, after on 15 January the UK government suffered what some call as a historic defeat by 230 votes. After the vote, PM May promised to hold cross-party meetings “to identify what would be required to secure the backing of the house”, according to a report by the Guardian.

Should PM May lose today’s vote by a short margin, which would mean her Brexit plan is not backed by the UK parliament, she could trigger a third meaningful vote, according to the Guardian. However, this would be preceded by two votes; on whether parliament wants a no-deal Brexit or the delay of it. Should she suffer a bigger defeat, news reports and opinion pieces internationally have suggested she should resign from her position.

“She will face a dilemma over how, and whether, to whip Tory MPs on the no-deal Brexit vote. Keeping that option on the table has been an integral part of the government’s negotiating strategy, but May would face a slew of resignations if she tried to whip MPs to vote for no deal with little more than a fortnight to go until exit day,” the Guardian writes in its thorough report about the vote scheduled for today.

PM May says she secured “legally binding” changes following last-minute talks with the EU, according to a report by BBC. “The PM said the changes meant the Irish backstop — the insurance policy designed to avoid a hard border in Ireland — could not ‘become permanent’,” the BBC report says.

UK nationals residing in Malta can rest assured

UK citizens who reside in Malta on 29 March 2019 will continue to have the right to live in Malta, and the residence document they currently hold as EU nationals will remain valid until a new document is issued, the Maltese government says in its guidelines recently published for a possible scenario of no-deal Brexit.

Citing its figures, the Maltese government says that the island nation is home to approximately 13,000 UK nationals, out of whom 5,000 are in employment, all exercising their EU treaty rights.

Under the decision of the Maltese government, UK citizens “who are, or will be exercising their freedom of movement rights in Malta” until 29 March 2019 will be able to maintain their freedom of movement.