Cayman seeks opportunity in Brexit aftermath

Cayman Islands leaders are seeking silver linings amid global political and economic turmoil in the wake of Britain’s decision to leave the European Union.

The Brexit referendum result Friday immediately led to the resignation of British Prime Minister David Cameron and saw financial markets tumble, while the British pound plunged to a 30-year low against the U.S. dollar.

The result has already led to calls for a second Scottish independence referendum, while leaders across Europe are bracing for a period of prolonged political uncertainty.

In the Cayman Islands the decision could impact the ability of citizens to live, study, work and travel freely within the European Union. There is also expected to be some impact on the financial services industry, though business leaders said it was too early to tell whether the changing landscape was a threat or an opportunity for the territory.

A man uses a multi-currency ATM in downtown Madrid, Spain.  The Brexit vote is leaving British expatriates filled with fear about their future. Those who have built lives abroad worry what the vote may mean for their property, their pensions and their medical benefits. - Photo: AP
A man uses a multi-currency ATM in downtown Madrid, Spain. The Brexit vote is leaving British expatriates filled with fear about their future. Those who have built lives abroad worry what the vote may mean for their property, their pensions and their medical benefits. – Photo: AP

Cayman Islands Premier Alden McLaughlin, in a speech to the Legislative Assembly Friday afternoon, said the decision had repercussions far beyond the shores of the United Kingdom.

He said the Cayman Islands had benefited from Britain’s relationship with the EU, including though freedom of movement for Overseas Territories’ citizens. He predicted the prospect of new governments in the U.K. and the U.S. would mean a period of “great uncertainty” for world politics, including for Cayman.

But he said the island could prosper amid the turmoil.

“In this sea of uncertainty, Cayman is an increasingly attractive place to live, work, invest and do business.

“The sound financial position of the Cayman Islands Government and the growing strength of our economy make us an excellent option for businesses and investors looking for a safe haven amid the current political and economic turmoil.”

Jude Scott, the chief executive officer of Cayman Finance, said in a statement Friday that the industry would do its part to ensure the success and stability of the global financial economy in a period of uncertainty.

He said, “Short term we will see some volatility in the financial markets, however we will continue to monitor the political and economic situation and plan for the long term to ensure we are well prepared for any implications this decision has over the next few years.”

Independent legislator Winston Connolly said the full impact of Britain’s exit from Europe remained to be seen. But he suggested there was opportunity for Cayman in the fallout to attract high-net worth individuals to the island.

“A number of people will be uncertain and looking for certainty and Cayman should seize this as an opportunity to offer them that. It’s an incredible opportunity to grow our economy,” he said.

The timing of Britain’s withdrawal from the European Union and the shape of any future relationship between the country and its continental neighbors remains to be established. Some forecasts suggest it could take more than two years for a new formula to be put in place, sparking fears of prolonged uncertainty in financial markets.

Mr. Cameron will officially relinquish the leadership in October with former London mayor and leading Brexit campaigner Boris Johnson the early favorite to replace him.

Mr. McLaughlin said he would be meeting with other overseas territories leaders and speaking to Overseas Territories Minister James Duddridge in the coming months to get a clearer picture on the likely impact of the decision.

“It is too early to make predictions or to be able to say what the full impact of the leave decision will be. But certainly it will be profound. It will impact not just the U.K. and its citizens resident there, but the overseas territories, crown dependencies and indeed the wider world.”

Tim Ridley, former chairman of the Cayman Islands Monetary Authority, said the decision of the U.K. to leave the EU was “perplexing and foolish.”

He added, “The ‘Dad’s Army’ brigade, who still dream of days of the Empire, and the generally disaffected have very possibly and irresponsibly thrown Britain’s youth and future over a cliff. They may come to rue their votes in the next few years. Likewise, the EU may come to regret the loss of the huge stability and influence the U.K. brought to the table. The only thing certain right now is uncertainty.”

He said the two key issues in any future negotiations between the U.K. and Europe were trade and financial services and freedom of movement, both potentially impacting Cayman.

“Any limitation on British passport holders’ ability to study and work and travel freely in the EU will similarly impact Caymanians who hold full British passports. This could be a significant downside. It certainly concerns me very much.

“Cayman has already met with difficulties in offering its financial products and services in the EU, e.g. passporting of Cayman funds. Those difficulties will be much greater with the U.K. out of the EU. On the other hand, both the U.K. and Cayman will have greater freedom to maintain and develop their tax and regulatory regimes without the heavy hand of Brussels bearing down on them. The U.K. will have far greater flexibility in its dealings with Cayman and particularly with respect to financial services and our regulatory regime. This could be a very significant advantage, but very much depends on the U.K. approach.”

Nicholas Dixey, a British lawyer with Nelson and Company in Grand Cayman, said the reality of Britain’s exit would take a while to sink in.

“Nobody really believed this was going to happen. Many Brits who voted “remain” are presently feeling sad, anxious and bewildered about the result. While many who voted “leave” are delighted, many are also apprehensive about the future.

“As the dust settles, Britain now has a real opportunity to reach out to European partners and make the case for a new, leaner, more flexible Europe of vibrant sovereign nations working together in friendly solidarity.

“We do not need an overbearing unelected European Commission to impose laws and regulations for mutual success, nor do we need to sing ‘Ode to Joy’ together. Only by empowering citizens and rebuilding and strengthening the relationship between the voters and their representatives can the darker rising forces of fascism be defeated.”

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3 COMMENTS

  1. They may come to rue their votes in the next few years. Likewise, the EU may come to regret the loss of the huge stability and influence the U.K. brought to the table.

    “As the dust settles, Britain now has a real opportunity to reach out to European partners and make the case for a new, leaner, more flexible Europe of vibrant sovereign nations working together in friendly solidarity

    It is very interesting to read and hear the different viewpoints from different stakeholders in this European Union/Britain equation, now that this monumental decision has been made.

    On one hand, there is the financial services professionals who have market uncertainties and profits for their clients to worry about based on the projected future of what an evolving European Union superstate would look like within the next few years; this project was just now becoming a major world player and is far from the finished article.

    On the other hand, we have the citizens of Great Britain at home who have to deal with the reality of what that relationship means to us on an everyday basis and the uncertainty of the overload of European immigrants flooding every crevice and corner of what is already a small island country.

    Players in the Cayman Islands can have their opinions, which are not affected by the everyday living reality of the thing: Cayman has enjoyed the best of both worlds in that the relationship of British/EU citizenship does not carry with it any level of reciprocity, thus Cayman does not have to deal with an influx of Europeans flooding into Cayman with full citizenship rights, as does Great Britain.

    This at-home reality is what has influenced this ‘leave’ vote more than any other issue, along with the fact that the British economy is one of the strongest in Europe and was seen by many as carrying too much of the economic burden for much weaker economies such as Greece and Spain.

    The EU has had to put together bail-out packages for both these countries in just the last 5 years that have cost the British taxpayer billions of pounds, just by being involuntary partners in a relationship in which they have had no say.

    Regardless of the rhetoric, the EU needs Britain much more than Britain needs the EU, except in the cases of the EU’s stronger economies like Germany and France, who do not wish to carry the burden of the EU’s vast economic and political responsibilities alone.

    As I’ve already pointed out, Britain’s on-the-street citizen and voter is as smart or much smarter than the politicians who would rule them if they could; they keep abreast of all matters that concern them, especially when it touches their wallets.

    This ‘out’ vote has not been a knee-jerk reaction.

    It was always on the cards based on existing conditions at home in Britain that people have just been waiting for that opportunity to be able to do what they consider best and leaving the EU is what the majority have considered best to do.

    It is their right and responsibility to do what they consider right and best for their country

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  2. It’s about time Tim Ridley woke up to the fact that childish insults are no substitute for reasoned arguments. In fact one of the big issues with the EU is that politicians in the member countries are also devotees of this tactic – when pushed into a corner their reaction is to slag off critics rather than address the issues raised.

    The problem with the Remain campaign was that too many of the most vocal advocates were more interested in their own future prospects than the interests of the UK and we are seeing a bit of that in Mr Ridley’s comments here. Does he really think the EU will put up something akin to the Berlin Wall to stop UK passport holders traveling, living and working in and working Europe? It’s much more likely that other countries will see this as an opportunity to break down the artificial barriers created by the EU and form trade alliances outside Europe.

    As for the impact on the Cayman Islands? Bluntly, I think you’ll find that the vast majority of the population of the UK (including the ‘Dad’s Army’ brigade) couldn’t care less so you’ll get no sympathy from them. In fact the UK may have done you a favour because it was, in my opinion, only a matter of time before the EU started to interfere in many of the cornerstones of Cayman Islands’ life, particularly the work permit and PR systems.

    The reality is that being part of a greater Europe has been a pretty rough and expensive ride not just for the UK but also for other major players. I recently spent time in Germany and Holland. There I found that anti-EU feelings were running at least as high there as they were in the UK.

    Mr Ridley if you were really so concerned about the impact of this vote on ‘Britain’s youth and future’ why weren’t you in the UK campaigning for ‘Remain’?

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  3. As much as I would like to believe that Cayman Islands could benefit from this decision made by the people of Great Britain . I personally don’t see how Cayman Islands could be seen as an attractive place to invest in now , and how the premier can think that Cayman Islands could benefit from this turmoil , when people / investors know that Cayman Islands is still a British Colony governed by Great Britain .

    I give the premier a little praise for trying to comfort potential investment / investors in the Cayman Islands , but I think that the Cayman Islands has been dealt a bad hand , and if the politicians / Government don’t play the cards wright the Islands could lose .

    The premier and all politicians need to understand that Cayman Islands is still under Great Britain and what Great Britain says goes , or otherwise have to be changed then that would caused alot of unnecessary work and time wasted. Where they need to be focused on is that Great Britain don’t destroy the stability of the Islands in the process of restructuring , not that I think it would be intended to happen , but if you are not there it could well happen .

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