An unlikely alliance? Spain could be key British ally in Brexit talks
SPAIN could prove to be a key ally for Brisain in its upcoming Brexit talks despite at times a frosty relationship between the two countries over the question of Gibraltar.
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UK officials have indicated that the Iberian country could prove to be on the UK’s side once Article 50 of the Lisbon Treaty has been triggered and the UK administration under Prime Minster Theresa May start talks over doing a trade deal.
It would appear that the UK is now making diplomatic sweet talk with Spain in order to win them over.
The House of Lords European Union Committee issued a report ‘Brexit: Gibraltar’ yesterday which looked at the question of the British territory in the light of the UK leaving the EU.
The 37-page report called for the two countries to “promote co-operation and good relations” and adding that it was in both countries interest to have a “free-flowing a frontier as possible following Brexit” and urged both sides to “work together in good faith”.
While the question of Gibraltar will undoubtedly be a potential stumbling block, Spain will not want to lose out economically due to poor Anglo-Spanish relations.
Analysis by financial consultants AFI have indicated that Spain not only benefits greatly from British tourism and investment but Spain runs a surplus in goods and services with the UK which equates to around 1.3 percent of its economy.
The UK market accounts for seven per cent of Spain’s entire export market, with the UK being particularly important for the car and aviation industry, food and drink and pharmaceuticals.
Should the UK head for a ‘hard’ Brexit where it withdraws entirely from involvement in the EU and free trade the impact would be felt in Spain.
It would not be in the UK’s interest to severe ties too much with Spain either.
In 2014, the UK made up 15.2 per cent of Spain’s entire direct foreign investment (DFI) while the UK accounted for 11.4 per cent of Spain’s DFI, amounting to £31.7 billion.
Spain also has a large financial stake in the UK’s banking sector with Banco Santander who bought Abbey National in 2004 and the owner’s of TSB, Banco Sabadell.
AFI said: “It’s estimated that Santander UK holds 10-12 per cent of British current accounts, while TSB has around five per cent. In 2015, the UK accounted for 28.6 per cent of Santander’s assets and 30 per cent of net profit. TSB accounted for 20.7 per cent of Sabadell’s assets and 17.2 per cent of its profits.”
The impact of any deteriorating relations though would be hardest felt in the area of tourism.
The UK is the main market for attracting visitors to the country with British tourists accounting for a sizeable 25 per cent - 15.5 million - of all visitors to the country.
Those visitors spent £12 billion in the country in 2015.
As well, Spain’s econommy while showing signs of improvement is still in a precarious situation.
The latest unemployment figures for February 2017 currently stands at 3.75m, representing a drop of 402,000 from a year ago but the rate is still at twice the level of the EU average
Ignacio Molina, a senior analyst at Real Instituto Elcano, a Madrid-based think tank said: “In what relates to the core of Brexit - the UK’s departure from the interior market and the EU, and its re-connection as a trade partner - Spain will be a dove.”
While Spain is a strong supporter of the EU and is unlikely to want to rock the boat with Brussels it will want to keep strong ties with the UK.
Mr Rajoy stated in January that the country would work towards a “most orderly” Brexit, one that “created the fewest problems for British and Spanish citizens.”
He added: “We will try to preserve the economic benefits of a very intense relation, but that has to be done from the basic and founding principles of the European Union.”
It is believed that Mrs May and her Spanish counterpart Mariano Rajoy kicked off talks, in an informal manner back in February during the EU summit in Malta.
The pair are said to have reached an early agreement on reciprocal residency rights for their citizens, according to British officials.
British Ambassador in Spain Simon Manley in a February speech in Marbella, Andalusia said: “The government will use our strong and valued bilateral relationships with our EU partners to seek a good deal for UK citizens overseas as soon as possible.”
A statement given to Express.co.uk from the Department for Exiting the European Union: "The UK has deep bilateral relationships with member states across the EU.
"Naturally, we will be negotiating with the European Union as a whole."