The Malta Independent 17 December 2018, Monday

€4,000 cash grant for advisory services to local businesses on Brexit launched by Malta Enterprise

Albert Galea Monday, 19 November 2018, 12:04 Last update: about 27 days ago

A €4,000 cash grant for advisory services to local businesses on Brexit was launched by Malta Enterprise at a business breakfast organised by them, The Malta Chamber of Commerce, Enterprise and Industry, and the Malta Chamber of SMEs (GRTU) on Monday morning.

The grant, Malta Enterprise CEO Mario Galea said, was aimed at helping those businesses that would be specifically affected by Brexit, who due to their dependence on the British market would need to carry out a close examination for their business model to mitigate the risks of different Brexit scenarios.

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The grant would cover 50% of the costs of any advisory support a business would need in relation to Brexit, capped at €4,000, and is ongoing until 31 January 2019.

The measure is open to registered small businesses carrying out economic activity in Malta that at  the point of application employs between five and 50 persons on a full time basis.  The applicant would have to justify a significant dependency on the British market in terms of imports or exports, and the Malta Enterprise said that a business shall be considered to have a significant dependency if for the last two years at least 20% of its turnover was dependent on transactions related to the British market.

The new scheme was announced at a business breakfast titled “Brexit: Threats, Challenges and Opportunities”, which saw an address by Economy Minister Chris Cardona, a key note presentation by the Chief Economist at the Institute of International and Economic Affairs Dan O’Brien, and a panel discussion.

During his opening address, Galea also explained that their message to British industries has not been one of total relocation; it has been “very soft”, with the focus being on convincing these businesses into setting up small scale outlets in Malta so that, even if there is no Brexit, that business would still have an outlet that can reach markets which are further away from the United Kingdom.  He said that one of the main lessons that had been learnt through the Malta-UK task force to deal with Brexit was that it is easier to attract non-British businesses to Malta than it is to attract British businesses.

Economy Minister Chris Cardona meanwhile said in his address that there were was no escaping the complexity of what Brexit was, noting that there was no guideline or handbook for how the activation of Article 50 was to be handled and so there was no precedent to reach for.

Cardona praised the Malta Enterprise’s scheme and said that information pages will be issued by different ministries in the coming days and weeks as well as the final Brexit date approaches.

He said that what was certain in all the negotiations was that both Britain and the EU want easy access to each other’s markets.  Each want competition to be fair and transparent, and each want a reliable way of keeping commitments and resolving disputes if they arise. Trade and the EU-UK border, he said, must be “as frictionless as possible” and done in a manner that is simple, not bureaucratic and in a way that does not add delays.

He said that from a colony, Malta had become one of the UKs staunchest allies and was at the forefront of negotiations to make sure that an agreement which is of benefit to both parties is reached.

Dan O’Brien, the business breakfast’s key note speaker, noted that many pro-Brexiters thought that the country would be fine because over 50% of the country’s exports were to countries outside of the EU and because they thought that since “Italy exports Prosecco to the UK they would give them a good deal”. 

This is not true, O’Brien said.  He said that the best way of looking at things was by comparing a country’s total exports with the country’s economy.  Britain’s exports are relative to 13% of its economy, and a quarter reduction in that would send the country into recession.  In Italy’s case however only 1% is quantified in exports to the UK.  In Malta’s case, the exports to the UK are much higher; however these are mostly through the services industry.

 O’Brien spoke of four possible Brexit scenarios.  The first is that there is no Brexit to begin with.  O’Brien thinks that there is a 15% chance of this occurring, although it hinges on a decision by the European Court to see who can instigate the cancellation of Article 50.  The second is that the EU makes more concessions, the possibility of which O’Brien said is very low as if there were concessions to be made, they’d have been made already.  The third is that the draft deal tabled in the House of Commons in the past days is adopted, which O’Brien thinks is also very low unless the Labour Party are scared by what the fourth scenario may bring.  That fourth scenario is that there is a no-deal Brexit, which O’Brien said is now the most likely course.

He said that this latter scenario would be a lose-lose situation.  The EU economy would fall back behind that of the US and it could make the EU’s position vis-a-vis Russia weaker as well.  A smaller market also makes for a less attractive market, and this could make the difference for non-EU economies currently active in the EU such as China.  There is then the simple matter that the more barriers to commerce that there are, the less commerce will exist.

For the UK meanwhile, those in favour of Brexit are pleased with their country’s exit from the EU because they feel that they now have laws coming from their own parliament and that they have control over immigration, matters which O’Brien said are fair.  However, he said, it is extremely hard to argue that the economic effects of Brexit will be positive.

For Malta meanwhile, there is no European country that is closer to the UK in relations.  Malta is pro-business, within the EU market, English speaking, and has connections to America as well.  O’Brien said, that these are all factors which put Malta a cut above most other countries in attracting investment from those UK companies who wish to retain bases in the EU in the post-Brexit era.

 

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