In­ter­est­ing op­por­tu­ni­ties for Cyprus

Financial Mirror (Cyprus) - - FRONT PAGE -

The prob­a­bil­ity of the United King­dom break­ing apart ap­pears to be at least 50%, with David Cameron ex­pected to be blamed for the out­come ei­ther way and the forces call­ing for a ‘Brexit’ get­ting louder from now un­til the next gen­eral elec­tions less than nine months away.

Of in­ter­est to Cyprus, Bri­tish-owned busi­nesses and ex­pats on the is­land is not so much the risk to the pound ster­ling, shar­ing of the UK’s na­tional debt, or the dis­tri­bu­tion of North Sea oil rev­enues.

The im­pact, some say favourable, will be if the Scots vote to leave,it will spell the end to PM Cameron’s po­lit­i­cal ca­reer and the re­turn of Labour which will cam­paign on a plat­form of higher taxes and pub­lic spend­ing, a tougher prop­erty tax regime, hob­bling and shrink­ing the City of London, and abol­ish­ing the con­ces­sions to for­eign res­i­dents which make Bri­tain one of the world’s most ef­fec­tive tax havens.

If any­thing, the Lib­eral Democrats, who would prob­a­bly be Labour’s coali­tion part­ners, would be even tougher both in terms of per­sonal tax re­form and in their an­tag­o­nism to the fi­nan­cial sec­tor. This all spells an op­por­tu­nity for Cyprus to har­bour more ex­pats or for­eign high net worth in­di­vid­u­als grad­u­ally con­sid­er­ing abandoning the UK.

The Fi­nan­cial Mir­ror polled some of its con­trib­u­tors on what im­pact, if any, they would see from a Yes vote.

THREATS AND OP­POR­TU­NI­TIES

Charis Pa­pachar­alam­bous, Di­rec­tor Gen­eral of the Cyprus In­vest­ment Pro­mo­tion Agency said that “CIPA does not have a spe­cific rule of thumb on such is­sues mainly be­cause none ever seem to be the same or carry the same reper­cus­sions.”

How­ever, he added that “we will mon­i­tor the sit­u­a­tion and act ac­cord­ingly as there may be op­por­tu­ni­ties but also threats as­so­ci­ated.”

FAVOURABLE RE­SULT

Our

own

economist

and

long-time colum­nist Fiona Mullen sees a Yes vote hav­ing a favourable re­sult for us.

“If Scot­land votes Yes, then it will pro­vide an in­ter­est­ing op­por­tu­nity for Cyprus. The gen­eral ex­pec­ta­tion is that if Scot­land goes, Labour will have lost so many seats that the Con­ser­va­tives will win the next gen­eral elec­tion. The Con­ser­va­tives have promised an in-out ref­er­en­dum on EU mem­ber­ship if they get re-elected. With­out the pro-Euro­pean Scots, the vote is much more likely to be for leav­ing the EU than for stay­ing.

Mullen, Di­rec­tor of Sapi­enta Eco­nomics, added that this “will leave many fi­nan­cial mar­ket play­ers with a dilemma: do they stick with ‘rump’ UK, a smaller econ­omy with un­cer­tain, non-EU rules, or do they seek out other, English-speak­ing ju­ris­dic­tions with an English common law sys­tem? And will they pick Ire­land or Cyprus? So if there is a Yes vote on Thurs­day, let’s move fast to pick up that new business be­fore the Ir­ish do.”

DO I GET MY WHISKY?

A more level-headed Nigel Howarth of the on­line ad­vice por­tal Cyprus-prop­er­ty­buy­ers.com said most of the business lead­ers in Scot­land want the coun­try to re­main part of the UK - and some com­pa­nies have said they’ll move their of­fices to Eng­land if Scot­land does vote for in­de­pen­dence.

“What hap­pens if (fol­low­ing a ‘yes’ vote) the Scot­tish Gov­ern­ment de­cides to raise/lower taxes on, say, cig­a­rettes, al­co­hol, petrol, etc.? Will there be bor­der cross­ing posts? How are they go­ing to deal with the in­evitable smug­gling? Will there be bor­der pa­trol ships off the coast in­spect­ing cargo? Who’s go­ing to pay for it all?”

“If Scot­land does break away, how is Cyprus (and the rest of the EU) go­ing to con­sider its cit­i­zens? As third coun­try na­tion­als? And what will hap­pen to the free move­ment of goods? Will I still be able to get a de­cent bot­tle of Scotch in Cyprus?” asks Howarth.

“And if the rest of the rest of the UK votes to leave the EU fol­low­ing a ref­er­en­dum, will its cit­i­zens be con­sid­ered as third coun­try na­tion­als by the Cypriot au­thor­i­ties? There are so many un­knowns at the mo­ment it’s dif­fi­cult to see what op­por­tu­ni­ties there may be – although I’m sure that many law and ac­coun­tancy firms are rub­bing their hands in ea­ger an­tic­i­pa­tion of a ‘Yes’ vote on Thurs­day.”

FALL­ING EN­ERGY REV­ENUE

Risk man­age­ment ex­pert Alan War­ing, au­thor of our RiskWatch col­umn and sev­eral books on the sub­ject, had a more long-term im­pact at the back of his head, on an is­sue that is be­com­ing fa­mil­iar by the day to Cypri­ots – en­ergy.

“A ‘Yes’ decision would be dis­as­trous for Scot­land for a long time to come and, for the re­main­ing UK, dam­ag­ing in the short term but re­cov­er­able. With my oil and gas ex­pe­ri­ence, I took par­tic­u­lar note of the almost des­per­ate plea from Sir Ian Wood, an im­mensely pa­tri­otic Scot and the bil­lion­aire cre­ator of the Wood oil and gas ser­vices group, not to de­stroy Scot­land’s eco­nomic pros­per­ity by vot­ing Yes. The ar­ti­cle about his stance by Jon Rees in the Fi­nan­cial Mail on Sun­day (Septem­ber 13) com­pletely de­bunked some of the op­ti­mistic non­sense about fu­ture Scot­tish ex­ploitable field re­serves put about by the Yes

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