Did you know that before Brexit, Gibraltar was the only British Overseas Territory within the European Union? This unique status meant that Gibraltar was eligible to vote in European Parliament elections, and it also took part in the 2016 UK referendum on EU membership.
Located at the southern tip of the Iberian Peninsula, Gibraltar is a British overseas territory which shares a border with Spain. Under British rule since the 1713 Treaty of Utrecht, Gibraltar is self-governing in all matters except defence and foreign policy, which are the responsibility of the United Kingdom.
Spain has long disputed the UK’s sovereignty over Gibraltar. However, the territory’s 1969 constitution states that there can be no transfer of sovereignty to another state (such as Spain) against the wishes of its people. A referendum in 2002 reaffirmed this position, when Gibraltarians overwhelmingly rejected the idea of joint sovereignty with Spain.
In June 2016, Gibraltar held a referendum on the issue of continued European Union membership. 96% of Gibraltarians voted to reject Brexit and remain in the EU, and turnout was a huge 84%. Despite its very high ‘Remain’ vote, Gibraltar’s EU membership was tied to the UK’s, so it automatically exited the EU when the UK formally left on 31 January, 2020.
Consequences of Brexit for Gibraltar
The UK’s decision to leave the EU in 2016 brought significant challenges for Gibraltar, particularly concerning freedom of movement and border controls. The territory was not included in the permanent UK-EU withdrawal agreement, and has instead been operating under ad hoc arrangements.
The 2020 Framework Agreement
On 31 December 2020, the UK and Spain announced a framework agreement for UK-EU negotiations on Gibraltar’s status. This provisional agreement allowed freedom of movement for Gibraltar residents and EU nationals at the Spain-Gibraltar border to avoid disruption, a vital measure for Gib’s economy.
The 2020 deal also included provisions regarding environment policies, state aid, equal treatment for frontier workers, employment laws, cooperation on tax matters, social security and transport, police, and judicial collaboration.
June 2025 Agreement: A Major Breakthrough
After years of negotiations, the UK, EU, Spain, and Gibraltar reached a political agreement on 11 June 2025 covering the core aspects of a future treaty.
Key Provisions:
- No border checks between Spain and Gibraltar: People and goods will circulate freely across the land border.
- Gibraltar will not join the Schengen Area, but Spanish officials will conduct Schengen checks at Gibraltar’s airport and port, not at the land border.
- UK sovereignty over Gibraltar is explicitly protected, with full operational autonomy for the UK’s military facilities, including the RAF base.
- Close cooperation between UK, Gibraltar, Spanish and EU authorities on customs, law enforcement and immigration procedures.
- Continued alignment on taxation, labour rules, environmental standards and frontier workers’ rights.
Why This Matters:
This agreement was vital to prevent the imposition of the EU’s new Entry/Exit System (EES)—an automated border control system requiring biometric passport checks—at the Gibraltar–Spain border. The EES, due to begin phased implementation in October 2025, would have created a “hard border,” threatening economic disruption and political tensions for Gibraltar.
Ongoing Challenges and Economic Impact
Though the June 2025 agreement marks a major step forward, Gibraltar still faces long-term adjustments in several key sectors:
- Healthcare: Reciprocal healthcare arrangements with the EU ended on 30 June 2022. Gibraltar residents now need travel insurance to access emergency medical care in Spain or other EU countries.
- Financial services, online gaming, and tourism have been affected by the loss of automatic access to EU markets. Some businesses have relocated or moved parts of their operations to avoid Brexit-related restrictions.
The Road Ahead
In conclusion, it’s fair to say that during the 2016 Brexit referendum, few could have foreseen the full extent of the challenges posed by Gibraltar’s withdrawal from the EU.
With the political agreement reached, the next step is for the UK and EU to finalise the legal text of the treaty. The UK Parliament will scrutinise and debate the final deal under the Constitutional Reform and Governance Act (CRAG) 2010.
While many uncertainties remain, Gibraltar is now positioned to maintain open borders and a stable economic relationship with the EU, without compromising its constitutional status or sovereignty. The coming months will be critical in shaping Gibraltar’s long-term future outside the EU but within a framework of close cooperation with its European neighbours.
Last Updated on July 4, 2025 by Vanessa Kingwell
