Europe

Gibraltar (British Overseas Territory)
Last reviewed: 24 February 2009

Country information

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Economy

Basic economic facts

GDP: £599 million (2006)
GDP per capita: £20,831 (2006)
GNP per capita: £19,173 (2006)
Inflation: 2.6 % (2006)
Major industries: Financial Services, Tourism, Shipping/Manufacturing
Major trading partners: International
Exchange rate: Equivalent to sterling

Gibraltar has a thriving, if narrowly-based, economy dominated by three main sectors – financial services, shipping and tourism (including retail for visitors). Since 1978 the economy has undergone major changes – a significant reduction in MOD activities, closure of the Royal Naval Dockyard, re-opening of the border with Spain (which dramatically altered the pattern of tourist/visitor expenditure) and significant growth in the financial sector. Gibraltar has adapted quickly and, according to a recent econometric study, has a resilience hard to equal elsewhere in the world.

The MoD used to employ over 20% of the labour force but now only employs around 8% and contributes about 7% of GDP. Financial Services currently accounts for about 22% of GDP, shipping 20% and retail/tourism 25%. Although figures are not readily available, internet gaming accounts for an increasing percentage of Gibraltar’s GDP. So, although the financial services sector is by no means the major employer, it is the major economic driver. Offshore financial activities, including 8,464 Exempt Companies are also fundamental in generating income and providing new jobs.

Gibraltar's financial sector is regulated by a Financial Services Commission (FSC), made up of UK and Gibraltar senior financial experts. The Commission is headed by a full time Financial Services Commissioner, appointed by the Governor. The UK has secured a generous share of EU Structural Funds for Gibraltar: some 8 million euros over the period 2000-2006. These funds are being used to encourage sustainable economic diversification, particularly in the areas of tourism, financial services, telecommunications, port and light manufacturing activities.

The tourism industry has grown rapidly over the past 15 years and Gibraltar now receives in excess of 8.1 million visitors per annum, who spend over £210 million between them. The majority are cross-border day visitors – 7.48 million in 2006 alone. Numbers for visitors arriving by sea and air are significantly lower - 143,000 visitors arrived by air (many head straight into Spain) and 225,000 by sea (cruise ships are usually in port for less than 12 hours). Overnight visitors represent a small percentage of Gibraltar’s tourism industry, only 59,000 visitors in 2006, staying on average 3.2 days. Hotel occupancy is generally low (47% in 2006 and 56% in 2005).

Gibraltar’s economy is growing at a rate of about 6% per annum, high by European standards. There is, however, the continued uncertainty resulting from the sovereignty dispute with Spain which inhibits the exploitation of full potential and deters some would-be investors, in spite of Gibraltar’s (much improved) reputation as a well-regulated, off-shore financial and business centre.