June’s surprise vote that triggered the UK’s would-be EU exit has sent political and economic shockwaves through Europe. While all 27 EU partners will be affected, its repercussions will be more palpable in counties like Malta. Malta has been a UK colony for more than 150 years and the two countries still share close economic ties.
1. Malta can become the UK's EU business gateway
As years of uncertainty and the potential loss of EU passporting rights could affect Britain’s status as Europe’s number one destination for foreign direct investment, Malta is positioning itself as an attractive alternative for businesses seeking an address in the European Union. “Malta could be the UK’s gateway to Europe,” Malta’s Prime Minister Joseph Muscat said, highlighting that this is not a situation where Malta tries to play dirty while a partner is experiencing a tricky stretch. However, in this new environment, Malta will want to be attractive and promote its own advantages in sectors such as financial services and gaming.
2. Maltese expat talent in UK might return home
By slowing the economy and limiting access to EU workers, Brexit could reduce the attractiveness of the UK’s job market, which is reported to have drawn 3.2 million citizens from other EU countries, including many Maltese nationals who might consider to relocate home. This would provide a welcome inflow of talent into Malta’s booming economy, with a number of sectors facing labor shortages. In addition to pitching its favourable tax regime for highly qualified foreign professionals to EU nationals working in the UK, the introduction of special incentives for Maltese nationals returning from working abroad could pull in much-needed extra talent.
3. Tourism could take a hit, but…
British visitors account for more than 500,000 of Malta’s 1.8 million tourist arrivals. Findings ways not to lose visitors and revenue from the UK market will become a top priority in the coming years. A post-Brexit scenario will see a weaker pound turning Greece and Cyprus into fiercer rivals. However, Malta could leverage the fact that English is one of its official languages in order to expand niche markets in tourism, teaching and training. Language courses, tertiary education programmes and EU-supported exchange programmes for students are some good examples. Less paperwork and more flexibility on length of stay might give the edge that helps Malta trump the UK in these particular niches.
4. Malta might attract more high-net-worth individuals
While the world’s super-rich will continue to invest in global property hotspots such as London, Malta’s EU membership could be seen as the determining edge when high-net-worth individuals are weighing the pros and the cons of their next country of residence. Malta has also just launched its version of a golden visa programme, in addition to a citizenship-by-investment programme. Through these programme, Malta acts as a gateway to Europe, providing visa-free access to the European Schengen Area for those third-country nationals taking up residence on the island.
5. Malta will retain bilateral UK healthcare agreement, health hub investment
Malta’s bilateral agreement with the UK facilitating medical treatment and specialised interventions for Maltese nationals in UK hospitals will not be affected, the Prime Minister said. He also announced that the UK-tied investment in the public-private partnership, which seeks to transform Malta into a centre for medical tourism and education, was not in jeopardy.
6. New opportunities in the iGaming industry
Effects on one of Malta’s most important industries, the iGaming sector, might be limited as the UK market is already severely restricted. However, there still might be effects on tax, movement of funds and staff while the UK-tied industry could undergo considerable internal changes. The Maltese gaming community would also do well to keep an eye on changes that may unfold in Gibraltar which is one of Malta’s toughest competitors. Gibraltar’s gaming hub might experience serious strains if the Spanish government continues with its plan to put stricter controls at the borders upon Brexit, especially when keeping in mind that the majority of Gibraltar’s Gaming companies are run by employees who cross the border daily.
7. Possible decrease in EU Cohesion funds, gain of sectorial allocations
Once the UK leaves the union, it will stop paying into the EU budget, thus cutting such budget by some €12 billion annually. However, there might be reallocation of specific funding. With the UK out, the EU will need to invest in other countries who can champion one or another sector for the EU on a world stage. Some good homework now can land Malta a good tranche of such newly available funds and FDI. For instance, there is widespread agreement that a Brexit would hit UK research hard as the UK receives some 15% of the EU’s research funding. While Malta thus far had limited success in further developing its pharma and life sciences sector, the promise of EU funds could put Malta onto the radar of scientists and research institutes.