Brexit uncertainty opens new doors

Brexit uncertainty continues to wreak havoc in the UK. Over the past year, key players such as Britain’s steel and motor industries have signalled strongly that Brexit is eroding operations and damaging the UK manufacturing industry.  In the event of a no deal Brexit, the UK and EU would be forced to move to WTO tariffs, which for industries like steel is as high as 20%. EU customers are therefore looking to other sources to guarantee supply and the demand from increasingly anxious customers in the EU is lowing significantly. 

This uncertainty also extended to the financial market, with In the Pound Sterling sinking to the lowest point of its 2019 range in mid-May.

These accelerated developments indicate that the rather artificial calm that has persisted in recent months, is decisively over. Cross-party talks between the ruling Conservative party and opposition Labour party have faltered and investors feel there is little hope of a breakthrough.

Investments in UK-based portfolio companies declined 12 per cent last year. Investors are looking for alternative destinations for their money.  Industry experts say that this situation will persist and that Britain will continue to be a less attractive destination unless some real clarity on Brexit is obtained.

Here are some interesting stats from IE Business School quoted in the Financial Times:

Looking at top destinations by deal count and % of total deals in 2017/18, the UK ranked fourth in the world ranking (behind China, US and India).They have now dropped off the top 5 list having been overtaken by Netherlands and France last year.  One reason for this is that investors in private equity are increasingly demanding a reduction in the UK exposure of the funds they invest in.

Liam Fox, Conservative MP since 1992 has this to say in an article on Brexitcentral about a year ago: “Leaving the EU will put us back in charge of our own trade policy.  It is an unprecedented economic opportunity and Britain will now have the flexibility to increase our trade with the rest of the world”.

With so many firms and private clients seeking EU alternatives, Malta has much to offer as the fastest growing economy in the EU.  ARQ has extensive experience in this area and has been instrumental in providing advice to several major clients and investors on the range of options available.  ARQ partners will therefore be participating in their second forum event in London this year to outline these opportunities in Malta, which include:

• Investment Migration: Malta provides a solution for UK citizens wishing to retain EU residency or citizenship
• Company structuring Malta offers a number of benefits and incentives for businesses relocating to the island
• Leveraging new growth areas in Malta-based industries: Malta’s growing profile in sectors such as Aviation, FinTech, Gaming and Pharmaceuticals offer significant opportunities for investors

We are currently assisting a number of UK-based companies which are looking to relocate to other EU jurisdictions like Malta.

As an EU member state, Malta provides all the benefits for a company to remain in the EU, post Brexit – be it in terms of customs duties, excise taxes, VAT etc.

Apart from a very favourable tax regime, Malta can also assist from a licensing, trademark and also logistics perspective. A number of pharma and medical cannabis operations have chosen Malta for their head offices for a variety of reasons, including the fact that it provides a flexible, yet well-regulated framework for the EU, and also access to North African markets.