Video report by ITV News Europe Editor James Mates
A little bit of Britain which has stood on Spain’s southern tip for more than 300 years could become a crucial bargaining chip in the Brexit negotiations.
Gibraltar’s residents voted overwhelmingly in favour of remaining in the EU in last year’s referendum – 96% wanted to stay – but now they face a future either outside the EU or outside Britain, something which is even more unpalatable to many than Brexit.
After Theresa May triggers Article 50 on Wednesday, Britain will need each of the other 27 EU nations to agree to deals. At the centre of Spanish demands is likely to be Gibraltar’s status.
Spain would like the Rock back and the government there knows now is the time to make demands.
The first area under the spotlight is likely to be the border crossing between Spain and Gibraltar, which will turn from an internal to an external EU border after Brexit and one the Spanish government will demand control of.
Senator José Ignacio Landaluce, of the Spanish Foreign Affairs Committee, told ITV News the border situation will be one where they “have to take action”.
“The rest of the EU will demand we control the southern border,” he said. “Even if we go easy, I can assure you things will be a great deal more uncomfortable than they are now.”
One of the main factors which makes it such a prize is Gibraltar’s prosperous economy, which has been growing at around 12% a year.
Britain will need to make sacrifices to protect the Rock’s status, but the Government in Gibraltar is optimistic it will not become a major bargaining chip.
Fabian Picardo, the chief minister of Gibraltar, told ITV News: “I think anybody who sees the negotiations in terms of chips and pawns is not understanding just how complex this negotiation is going to be.
“In the 21st century the sovereignty of Gibraltar is not going to change and therefore I think it's a wasted effort on the Spanish part to somehow pollute this negotiation with the sovereignty of Gibraltar."
But regardless of Gibraltar’s sovereignty, some service industries which have thrived because of their access to the single market – something which is under threat post-Brexit - are now looking elsewhere.
Andrew Stone, of insurance firm Elite Insurance, said: "Gibraltar could lose us entirely in terms of the insurance company if we re-domiciled the entire business to another mainline Europe jurisdiction.
“The consequences in terms of premium income from one jurisdiction to another - so be it, we have a business to run and we need to secure our relationships with our European partners going forward."