Gibraltar heading for​ abrupt exit from single market, says Spain

Gibraltar is heading for an abrupt exit from the single market without the benefit of any transition deal, according to senior Spanish government sources, who revealed that the British government had failed to offer any proposals on the future of the Rock.

The EU shocked Downing Street in April when it effectively backed Spain in the centuries-old territorial dispute. In guidelines outlining their approach to the Brexit negotiations, the 27 member states insisted Gibraltar would be outside any future trade deal with the UK unless an agreement was reached in advance with Madrid over its future status.

A Spanish government source said this stipulation included any deal on a transition period designed to soften the blow for the UK of falling out of the single market and customs union by retaining the status quo for a period after withdrawal.

There had been no proposals from either the British government or the government of Gibraltar on the future of the territory, over which Spain has a longstanding territorial claim, the source added.

Spain believes Gibraltar will now fall out of the single market on 29 March 2019. Gibraltar’s prime minister, Fabian Picardo, has previously suggested that a hard Brexit would pose an “existential threat”.

The Spanish government source said May’s government appeared to have bigger issues to deal with than the fate of the 28,000 people who live on the rock.

“I think the situation with Gibraltar is crystal clear,” the source said. “Gibraltar became associated with the EU project because of their dependence in the UK. This is going to stay until March 2019. In 2019 when the UK leaves the EU, Gibraltar will leave with the UK.”

“This is what we are telling the Gibraltarians”, the source added. “If you want to have your existing status, you will have to talk with us. And I cannot understand why Picardo has refused to do so. I think in the past he has played very hard on the other side. But reality arrives.”

Of Britain’s lack of proposals with regards to the future of the Rock, the Spanish government source said: “I honestly believe they have other more important issues.”

Such is the economic importance to Gibraltar of retaining the rights of EU membership that just 4% of the population of Gibraltar voted to leave in the UK’s 2016 referendum.

Last month Theresa May claimed she would be fighting for a deal that “works for Gibraltar as well as the United Kingdom”, in response to concerns expressed in the House of Commons that Downing Street was willing to abandon the territory in its effort to secure an EU-UK trade deal.

Clare Moody, the Labour MEP for south-west England and Gibraltar, said: “The UK should be insisting that the transition period is a continuation of all existing terms, including for Gibraltar, before the future relationship [with the EU] is finalised.”

A spokesman for the government of Gibraltar said they would not comment “on what unnamed Spanish sources are alleged to have said”.

Madrid has also hit out against claims by the Brexit secretary, David Davis, last week that Spain was among a number of member states keen to move on to trade talks.

Davis told an audience in Germany, whose government he accused of blocking talks about a future trade deal: “Many of them [the member states] do want to move on. You know, they see it’s very important to them. Countries like Denmark. Countries like Holland. Countries like Italy and Spain. Countries like Poland can see the big, big benefit in the future deal that we’re talking about.”

The Spanish government source said Britain had consistently misinterpreted Spain’s position. “It is amazing how the British misread us,” the source said. “Almost as if we speak a different language. They come to us, we say: ‘We will see what we can do.’ But it means nothing.”

The source added: “When David Cameron came to Angela Merkel and said: ‘We must stop [Jean-Claude] Juncker being commission president,’ she said: ‘We shall see what we can do.’ It meant nothing then as well.”

“The Foreign Office is very good – at least, they used to be very good – but they come to see us on any other issues and they would understand we are favouring their position when it wasn’t the case,” the official said. “I get the impression that when the British and Mr Davis come to see us and we say: ‘I will see what I can do,’ he makes a positive interpretation.”

“We are sticking behind [Michel] Barnier [the EU’s chief Brexit negotiator],” the source said. “We want a deal. We think you took a decision, you stick to your decision and you should leave in 2019. And we want a fair deal. That’s all. But we will stick to Barnier. We will not find other ways out of it.”