A ‘no deal’ Brexit would likely have little direct impact on the Cayman Islands, according to the United Kingdom’s representative here, Governor Martyn Roper.
As the UK moves closer to leaving the European Union without securing a deal on the future relationship, Roper acknowledged there was still “considerable uncertainty” about how things would play out for the British Overseas Territories.
But he said there would be no obvious immediate repercussions for the Cayman Islands economy.
“The direct impact is fairly minimal but we can’t be 100 percent certain because we don’t know how this is going to develop,” he told the Cayman Compass in an interview.
“I don’t sense at the moment there is massive concern that this is going to have a big impact.”
One area of concern is that the UK will no longer have a voice within the European Union on financial services policy when it comes to drawing up ‘blacklists’ and ‘grey lists’ that can impact the reputation and ability to do business of offshore financial centres.
“I recognise there are concerns about that because the UK, in the past, has obviously stood up for Cayman and other overseas territories,” Roper said. “Once we are out of the EU, we will no longer be around that table.”
The result of the Conservative party’s internal election to determine the new UK prime minister will be revealed on Tuesday, 23 July. Both candidates, Jeremy Hunt and Boris Johnson, have refused to rule out a no-deal Brexit, and frontrunner Johnson has been particularly strident about the need to leave the European Union with or without an agreement.
“My pledge is to come out of the EU at Halloween on 31 October,” Johnson told the BBC in a recent interview.
“And the way to get our friends and partners to understand how serious we are is finally, I’m afraid, to abandon the defeatism and negativity that has enfolded us in a great cloud for so long and to prepare confidently and seriously for a no-deal outcome.”
Economists have warned that such a move would have a devastating impact on the UK economy. Roper said he believed everyone was working hard to avoid a ‘no deal’, but acknowledged both candidates had indicated they would be willing to contemplate that outcome if outgoing leader Theresa May’s deal cannot be renegotiated.
At a gathering of British Overseas Territories leaders held in Cayman late last month, Lord Tariq Ahmad, the UK minister with responsibility for the overseas territories, held a session on potential impacts of Brexit.
For territories like Gibraltar and the Falkland Islands, that have direct trade links with the European Union, there is considerable concern about the impact on their economies.
But for Cayman and some of the other Caribbean territories the threat is less pronounced.
“Cayman doesn’t do a lot of direct trade with the EU,” Roper said. “We need to watch it carefully and I will do a lot more public communication on this as we get closer to a possible no deal or agreement in October. I will try and make it as crystal clear as I can what the implications are for Caymanians.”
He does not expect there to be any visa or travel implications for British Overseas Territories even in the event of a no-deal Brexit.
He added that there would be opportunities for Cayman in the aftermath of Brexit as the UK looks to build its trade relationships around the world.
He said the UK was looking to include the overseas territories in its new vision for global Britain, and that approach could tie in with efforts in Cayman to establish new trade relationships. The governor’s office has been heavily involved with the establishment of a new Ministry of International Trade, Investment, Aviation and Maritime Affairs, and the setting up of a Cayman Islands government office in Hong Kong.
Roper said the UK had the third biggest network of consulates and embassies in the world, and Cayman and other overseas territories could access that to build new relationships and trade routes.
He highlighted China as a potential growth area for financial services, as well as Cayman’s shipping and aircraft registers. He also believes high-net-worth tourists could be attracted from China.
Roper said a trade summit involving the overseas territories, UK policy advisers and business associations from China and the US, held in the Cayman Islands last month, was the first of its kind and a sign that the territories, including Cayman, would have a bigger role to play in Britain’s future.