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Home Opinion Brexit BREXIT – A Historical Act of Faith - 7. A Less Certain Future for the Isle of Man

BREXIT – A Historical Act of Faith - 7. A Less Certain Future for the Isle of Man

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Article Index
BREXIT – A Historical Act of Faith
2. Historic Parallels
3. Brexit - A Political Cult?
4. The Triggering of Article 50 Signals the Beginning of a Difficult Journey
5. A Two-Year Horizon and a Lot of Challenges
6. Replacement Trade Agreements and Broader Ramifications
7. A Less Certain Future for the Isle of Man
All Pages

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7. A Less Certain Future for the Isle of Man

In July 2016, then First Minister Allan Bell described Brexit as a “journey into the unknown for both the UK and the Isle of Man”. On 24 March 2017 IOM Treasury Minister Alf Cannan echoed this sentiment by calling Brexit as a “journey without maps.” Both descriptions seem appropriate.

By April 2019 the Isle of Man could lose its current long-standing right to trade tariff-free with the EU (This right is granted to the Island under Article 1 of Protocol 3 of the UK’s Act of Accession to the European Community). Until there is a viable alternative, the loss of this right in particular means that the Island will face greater economic uncertainty.

Theresa May has assured the IOM Government by letter, saying that “We remain committed to engaging with the Isle of Man as we prepare to exit the EU, to ensure that your interests are properly taken into account.” As comforting as this assurance may seem, the UK Government has made no tangible commitments and has given no bankable guarantees to the Isle of Man. The Island is therefore entering the same period of potential political and economic weakness as the UK, with only vague assurances from Westminster.

The consequences of Brexit will be wide-ranging for Manx economy, but will vary from sector to sector. There will likely only be a marginal impact on immigration as the Island does not allow freedom of movement the same way the UK does, although the recruitment from the EU countries is expected to be severely restricted. This change could negatively impact areas of the economy such as the NHS. The impact on the financial services is likely to be more muted here than in the UK because the Island does not currently benefit from an automatic right of access to the Single Market. The E-gaming industry also looks as if it will be relatively insulated. However, in the absence of satisfactory new trade arrangements the Island’s manufacturing, agricultural, fishing, aircraft, shipping and yachting industries could all potentially be adversely affected. Perhaps the greatest threat is the general economic ‘turbulence’ that will hit the Isle of Man if a suitable deal is not reached.

The Isle of Man was not given the opportunity to vote in the Brexit Referendum. It has however no choice, but to make the best of the result. Although Brexit could deliver certain new opportunities to the Island, there are potentially various serious economic and political risks ahead. For example: will the UK’s departure from the EU ‘table’ expose the Island to the threat of being blacklisted by the EU as a tax haven? In the past, the UK has defended the Island from these types of threats. In the future, it may not be able to do so.

The Isle of Man needs to take a sober assessment of what the Brexit risks might bring in their wake. Ideally, the IOM Government will undertake or commission a comprehensive professional risk assessment of how Brexit could affect every aspect of life on the Island. Part of this exercise should include the development of risk mitigation strategies. It may also be advisable for the Island to appoint a ‘Brexit Minister’. Without being overly melodramatic, Brexit has put the future of the Isle of Man on the line. It is therefore imperative that the IOM Government does all that it can do to prepare the Island for a post-Brexit world.


[1] “When forecasting the outcomes of risky projects, executives too easily fall victim to the planning fallacy. In its grip, they make decisions based on delusional optimistim rather than on a rational weighing of gain, losses and probabilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or to deliver the expected returns - or even to be completed.” Page 252 of ‘Thinking Fast and Slow’, Daniel Kahneman, Penguin, 2011.



 

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