I have been asked numerous times since June 2016 what impact Brexit will have on the Isle of Man and the businesses that operate here. Perhaps not surprisingly, nearly three years after the referendum it remains difficult to give an answer of any real substance, but I thought it might be useful to provide some background to the Island’s current position, together with a few of the differing ideas as to what the future might hold.
Firstly, it is perhaps worth stating for clarity that the Isle of Man is not currently part of the EU and is not included within the scope of the UK’s membership.
The relationship between the Isle of Man and the EU is covered by an arrangement known as ‘Protocol 3’ which allows the free movement of manufactured goods, agricultural products and people between the Isle of Man and the European Union.
The Isle of Man is not part of the United Kingdom either. The Island is self-governing with its own independent legal and fiscal systems. Tynwald, the Island's parliament, legislates for the Isle of Man and despite the obvious wishes of some in Westminster, there is nothing to suggest Brexit will have an impact on the underlying constitutional relationship between the Isle of Man and the United Kingdom.
What might happen next?
The most likely outcome, if Brexit ever happens, is that the Isle of Man will be reliant on the UK to negotiate an arrangement covering the Island within its final agreement to withdraw from the EU. The proposed withdrawal agreement that has been regularly rejected by the UK Parliament over the last few months, would apply to the Isle of Man but its application would be limited to the same extent as Protocol 3.
Time to go it alone?
Some of the more ardent nationalists have suggested this might be the time for the Isle of Man to seek full independence, but this view seems unlikely to gain any traction with the Manx Government or with business in the Island due to the perceived instability this would bring. Such a move would require the Isle of Man to negotiate entirely new arrangements with both the UK and the EU to cover trade arrangements and the movement of people at a time when Brexit seems to have both the EU and UK fully occupied.
Similarly, seeking our own separate arrangement with the EU is seen as “too risky” as it would likely involve the renegotiation of the arrangements with the UK (our largest trading partner) that currently enables the free movement of people and goods between the Island and the UK.
Will Brexit really happen?
It remains to be seen whether the UK (and by extension of Protocol 3, the Isle of Man) will leave the EU as there seems no political or public consensus on the issue.
As a result, the Isle of Man must continue to follow behind the UK trying whenever possible to push for its interests to be considered by those within the UK Government who may be able to influence negotiations with the EU, but with sadly very little impact about what could be an incredibly significant decision for our future.
Peregrine Corporate Services is licensed by the Isle of Man Financial Services Authority.