Tuesday, March 24, 2009

Guardian reports Good times on Main Street for thriving Gibraltar

The UK's The Guardian newspaper reported today on the "Good times on Main Street" and spoke of a "thriving Gibraltar".

The report says that Spaniards are flocking to the Rock looking for bargains created by the strong euro and a falling pound, causing Gibraltar's economy to boom.

Good times on Main Street - The Guardian story

A line of Spanish cars snakes past the Union flag and helmeted Gibraltarian bobbies at the frontier. But their owners are not here to reclaim Spanish sovereignty over the rocky peninsula. They are here to spend mighty euros on goods priced in cheap pounds.

As financial turmoil and recession sweep the world, this tiny, sun-baked strip of land on Europe's southern coast is proving a miraculous survivor thanks to a sinking pound and an economy that grows at a rate comparable to that of China.

Many of those cars end up circling around the car park of the Rock's largest supermarket, a local branch of Morrisons, as they fight to grab one of the few empty spaces.

"We used to come here just to buy cheap alcohol and cigarettes," said Jesús Martín, from the Spanish town of La Linea, just across the frontier. "Now we buy everything."

Spanish shoppers cram the Morrisons aisles, looking suspiciously at such quintessentially British foodstuffs as Marmite, baked beans and hot-cross buns, but snapping up everything from cheap milk to rice.

"Things used to be cheaper in Spain, but not any longer," said Ana Santos, who had come for nappies and groceries.

Articulated lorries arrive daily to fill the shelves at Morrisons with goods brought direct from low-cost Britain.

"Last Christmas was a record for the store," said Edward Macquisten, of Gibraltar's Chamber of Commerce.

"Everyday staples are now more expensive in Spain than they are in Gibraltar. That is unheard of. People come just to visit Morrisons."

Along Main Street, Spaniards are extending their British shopping experience to the local branches of stores such as Marks & Spencer, Bhs and Mothercare. Underwear, babygrows and make-up are all taken back into Spain.

Spaniards are not the only ones flooding across the border. British expatriates, some struggling to cope with the plunging value of their pensions against the euro, are coming from miles away to shop. Some drive for more than an hour from Málaga.

"We used to do our weekly shop at a Spanish supermarket but now we come here," said Ray Emerson, who lives in nearby Sotogrande. "It's just as cheap, if not cheaper."

Even Gibraltarians are spending more on the Rock. "We used to go over to Spain every Friday night for a Chinese and a drink," said health worker Sukh Khaira. "Now we stay here to go out."

Gibraltar's escape from the worst of the global downturn even extends to property. Sleek new high-rise apartment blocks line the harbour. Estate agent Louis Montegriffo said that, overall, prices were still rising slightly. Demand from rich foreigners seeking a safe harbour by taking up Gibraltar's offer of residency for "high net-worth individuals" is on the up.

"We actually saw an increase in the numbers looking at the beginning of the year," he said.

Over the past few years Gibraltar's economy has grown at up to 12%, more than doubling in size over a decade. Financial services, low taxes and a niche in online gambling have transformed an economy that, a quarter of a century ago, was more than 60% dependent on the Ministry of Defence.

"If we were a sovereign state we would be 13th in the world in GDP per capita," said the Chief Minister Peter Caruana. That would put it above Canada or Switzerland. Growth will slow with the global recession, he said, but will not stop.

The future looks relatively bright. The European court of first instance ruled in December that Gibraltar could set its own tax rates. Corporate tax is expected to tumble, attracting more business.

With offshore havens now on the global political hate list, however, Gibraltar may find itself under intense political scrutiny.

Marcus Killick, head of Gibraltar's Financial Services Commission (FSC), said the Rock's status as part of the EU placed it at the bottom of any list of offshore centres that might be targeted by politicians. Gibraltar has neither the banking secrecy of Switzerland or Andorra nor the non-EU status of the Channel Islands or the Isle of Man. "We are required to comply with EU directives," he said.

At his Image store selling souvenirs, cameras and cheap watches, Suresh Manji was not so sure about the future. "Things are down on last year. There are fewer tourists and local people are buying less," he said.

The tourist season has not started yet, but the 7 million visitors who cross the frontier every year are key to prosperity.

"That will slow down this year," Macquisten said. "There will be fewer British visitors to the costas and it follows that you will get fewer here."

Tim, an expatriate shopper from Marbella, 40 miles away, said: "You already see fewer people visiting their houses in Spain. I've got neighbours who normally come for public holidays. This year we haven't seen them."

Many Gibraltarians, however, will be praying the pound stays weak as they continue to roam the aisles in Morrisons.

Spain's El Mundo enviously picks up the story

In a typical tone of envious criticism, Spain's national daily, El Mundo, grudgingly reports on The Guardian story today, saying that it's the Spaniards who are saving Gibraltar from the global recession!

"Gibraltar is escaping itself from the crisis, not because its financial system is strong and secure or because its citizens have been more careful with their mortgages. No... nothing to do with any of that! It's Spaniards who are coming to Gibraltar to buy, taking advantage of the weakness of the pound, which is raising this British territory east of the Bay of Algeciras."

All I'll add is my grateful thanks to them... "Cheers me dears"!