Gibraltar's economy: output made by a workforce living in Spain

Why Gibraltar counts its output per worker

The government's statistics office produces a gross domestic product, and the series it publishes runs a long way up. Output was £152 million when the workforce stood at 12,995 in April 1988, and £352 million by 1996, when the workforce was almost unchanged at 12,980. It reached £806 million in 2007/08 and £1,201.31 million in 2011/12, came in at about £1.794 billion for 2015, and stood at about £2.568 billion when Covid arrived. The initial estimate for 2024/25 is about £3.09 billion. The World Bank series in Gibraltar's record hold no value for output, growth or unemployment, so these are the government's own figures, set out by the Minister for Economic Development in the budget debate of July 2025.

The same speech explains why the government no longer divides that output by the resident population. Almost half of the people producing it live in Spain, and their wages leave the territory, so a figure per resident would credit Gibraltarians with income they never receive. The replacement is output per worker, counted across the whole workforce including frontier workers. On that measure each worker produced £11,697 in 1988, £27,119 in 1996, £53,998 in 2011 and £97,662 in 2024/25.

The minister set the new measure beside the United Kingdom's for the years where both exist.

The gap he drew from it was £11,648 a worker in 2023, the latest year with a British figure. He also conceded the cost of the method: no other jurisdiction publishes on the same basis, so the per-worker figure can be compared with Gibraltar's own past and with the British series, and with little else. The one comparative index in the record is a Human Development Index of 0.961 for 2018.

How the naval base stopped paying for Gibraltar

For most of its British history the territory lived off the fleet. HM Dockyard was set up in 1704, straight after the capture, with a quay, a careening wharf and workshops, and coaling facilities followed in 1840. Parliament approved Captain Augustus Phillimore's plan for a new naval dockyard in 1895. The opening of the Suez Canal in 1869 made the port a provisioning stop on the route east, and Britannica still lists the provisioning of ships and military personnel among the territory's main sources of income.

The defence economy shrank fast from the 1980s. The Ministry of Defence accounted for over 60% of the local economy in 1984, and the estimate now given is about 7%; the economy article on Wikipedia puts the defence share nearer 6% of output. The dockyard was sold to the A&P Group in 1984 and later passed to the government as Gibraltar Ship Repair. Norway's Kværner took it over in 1990, and it closed for 18 months from 1996. In 2006 the Ministry of Defence announced that services to the base would be contracted out, and the change was complete by January 2007. A British company, Balaena, bought the dockyard in 2022 and revived military ship repair there.

The frontier closure of 1969 had already forced one change of direction. The Bland Group, a shipping agency founded in 1810 and run by the Gaggero family since 1891, turned to tourism in the year the border shut. During the closure most visitors arrived by sea, and air arrivals were 38% of the total in 1974. The government's figures put growth at 133% in the eight years from 1988 to 1996, after the frontier had fully reopened, and a Bournemouth University report confirmed the calculation in 2003. The political story of the frontier belongs to Gibraltar's history; its economic consequence was that output more than doubled while the workforce stayed the same size.

Who fills the jobs in Gibraltar's labour market

The jobs grew faster than the resident population could fill them, and Spain filled the difference. The October employment survey, run since 1972, counted 21,519 employees in October 2012 and 29,995 by October 2018. Between 2013 and 2018 the workforce grew by 7,088 and frontier workers grew from 7,504 to 13,654, so 87% of the new jobs went to people living across the border. The public sector draws differently: about 90% of its staff are Gibraltarians or other British nationals, according to the government statistics Wikipedia cites.

After the Brexit referendum of 2016 the government changed its target, and its 2019 manifesto made labour productivity the aim in place of a larger output. It wants to hold the labour market to a maximum of 32,000 employees and later bring it down. The growth that followed was slower and more local. From 2018 to 2023 the workforce grew by 1,528, and frontier workers accounted for 490 of that, or 32%. By October 2024 the survey counted 31,634 employees and 13,844 frontier workers, 300 fewer frontier workers than a year earlier. The minister reported that Gibraltarian employment rose by 304 in that year and described it as the first such result since the surveys began.

How many people cross each day is given differently depending on who is counting. The House of Commons Library briefing of July 2026, citing a government fact sheet, says there are over 15,000 frontier workers, more than half of the workforce, and the Elcano Royal Institute gave the same order of figure in 2025. The October 2024 survey, as the minister presented it, puts the share at about 44%. Neither source reconciles its figure with the other.

What online gambling pays into Gibraltar's treasury

Online gambling is sold from Gibraltar to customers who are mostly in Britain. A regulatory framework for online betting and gaming was built in the 1990s, and in the early 2000s bookmakers and online operators moved to the territory in numbers, drawn by a regulated jurisdiction and a corporate tax regime for companies controlled by non-residents. That regime was phased out by January 2011 and replaced by a flat corporate tax rate of 10%. Every gambling operation needs a licence, first under the Gambling Act 2005 and now under a newer Act that carries existing licensees across; the Licensing Authority is a designated minister and the regulator is the Gambling Commissioner, supported by the government's Gambling Division. The division says the authority has "traditionally only considered licensing blue chip companies with a proven track record in gambling in other jurisdictions."

The Minister for Justice, Trade and Industry gave the sector's size to Parliament on 1 December 2025: about 30% of output, more than 3,400 employees, and about a third of tax receipts, through corporate tax, income tax, social insurance and local gambling duty. The firms are regulated in both Gibraltar and the United Kingdom, and because British gambling tax is charged where the customer is, Gibraltar-based firms already paid about £750 million a year to the British Exchequer.

The British budget of 26 November 2025 raised remote gaming duty, the tax on online casino games, poker and bingo, from 21% to 40% from April 2026, and the tax on online betting from 15% to 25% from April 2027. Taxes on betting shops, bingo halls and casinos in Britain stayed where they were, and retail bingo duty was abolished. The minister said the market had expected no rise above 30%, and that the effective rate on the firms' profits, estimated at 60 to 65% before the change, could reach 80 to 100% according to some British modelling. What reaches Gibraltar is indirect: less corporate tax if the firms absorb the cost, and less income tax if they cut jobs. His response was to instruct the Gambling Commissioner to speed up licensing for business outside the United Kingdom.

How Gibraltar built a finance centre from tax law

Finance came first as a tax arrangement. The Companies (Taxation and Concessions) Ordinance of 1967 gave special treatment to international business and helped bring private banking and captive insurance management. Gibraltar entered the European Economic Community with the United Kingdom in 1973 on terms that left it outside the common external tariff, the Common Agricultural Policy and value added tax. The Financial Services Commission was created by an ordinance of 1989 and began work in 1991.

The international standing of the arrangement changed several times. In June 2000 the OECD named Gibraltar among 35 jurisdictions it identified as tax havens. In April 2009 it listed the territory as committed to the international tax standard and not yet implementing it; by October 2009 Gibraltar had signed 12 more tax information exchange agreements, 13 in all, and moved onto the OECD's white list. An exempt regime offering no tax on capital income to up to 8,464 qualifying companies was agreed with the European Union in 2005 to end on 31 December 2010. In December 2008 the European Court of Justice ruled that Gibraltar's authorities had a political and administrative status separate from the British government, which allowed the low-tax system that took full effect in 2010. A stock exchange opened in 2014, a framework for distributed ledger technology followed in January 2018, and Spain, the United Kingdom and Gibraltar signed a tax agreement in 2019 on residence rules and cooperation between the tax authorities. By December 2025 the government had also secured removal from the European Union's grey list.

The money itself is sterling. The Gibraltar pound is issued under the Currency Notes Act of 1934 against reserves of sterling, as a currency board, and Bank of England notes are legal tender beside it. The government-owned Savings Bank takes deposits and lends them back into the territory by buying loan notes from private projects, while holding more than £200 million in loan notes of British companies; its reserves are targeted to reach £100 million by 2027.

What ships buy in the Bay of Gibraltar

The port's main trade is fuel. Suppliers delivered 4.3 million tonnes of bunkers to more than 5,500 ships in 2021, and the volume fell to about 3.4 million tonnes in 2022 as the Spanish port of Algeciras competed for the same ships. Much of the fuel starts in Spain: in 2007 Gibraltar imported about 1.5 million tonnes of petroleum products from the Campo de Gibraltar for bunkering. Petroleum made up 51% of an export total of US$271 million in 2004, principally re-exports, against imports of US$2.967 billion the same year. Britannica notes that the port facilities occupy most of the western shore and part of the reclaimed land.

Making things is a small share of the whole. Manufacturing represents about 2% of employment, and one company, the Bassadone Automotive Group, converted SUVs into ambulances and project vehicles for the United Nations and other agencies in 2020, employing about 320 people across its activities. Ship repair continues at the old naval dockyard. The territory generated 142 million kWh of electricity in 2006, all of it from fossil fuel, and consumed the same amount.

Who spends money in Gibraltar and where they sleep

Most visitors come for the day and sleep in Spain. The Borders and Coastguard Agency counted 9,263,400 visitor arrivals at the land frontier in 2025, against 10,786,300 in 2019 and 5,343,300 in 2020. Cruise ships brought 355,468 passengers and 148,114 crew in 2025. The 2023 tourist survey put visitor spending at £258.09 million, 23.5% more than in 2022, and £190.1 million of it came from excursionists arriving from Spain. Visitors staying in hotels spent £37.0 million, and cruise excursionists £14.4 million.

The pattern was set in 1985. When the frontier fully reopened on 5 February, 45,000 people entered in the first week, and by 1986 five million visitors a year were arriving. Hotel occupancy had fallen under 30% by 1993, and a programme of port, airport and street works after 1996 took visitor numbers from four million in 1996 to seven million in 2001. Shopping is part of the offer, because goods and services carry no VAT.

The survey shows who comes by which route. In 2023, 54.1% of excursionists by land were Spanish and 19.4% British, while 88.6% of air departures were British nationals, and visitors leaving by air had stayed an average of 3.1 days. The Minister for Economic Development warned in July 2025 that an easier crossing could bring more visitors and fewer overnight stays, if cheaper accommodation in La Línea sat on the other side of an easy crossing.

What the European treaty changes for Gibraltar's economy

Gibraltar spent 43 years inside the European Union without access to its internal market for goods, a choice the government says was made by consensus in 1972. It voted about 96% to remain in 2016, left with the United Kingdom in January 2020, and at Spain's insistence was left out of the British trade agreement with the Union. The agreement published and signed on 14 July 2026 is the replacement. Gibraltar's Parliament adopted the implementing legislation on 31 March 2026, and the physical border came down in July 2026.

It creates a customs union between Gibraltar and the European Union, so goods arriving from outside the Union are checked in Spain or Portugal first. Gibraltar's indirect taxation is to be aligned with the Union's, with its own transaction tax and excise duties after a transition, and level playing field rules cover state aid, taxation and labour standards. Part Four gives frontier workers rights to seek work and to equal treatment on both sides, and Part Five sets up a joint British and European fund for economic cohesion with the Campo de Gibraltar.

That region's economy is already bound to Gibraltar's. A study for the Gibraltar Chamber of Commerce by John Fletcher of Bournemouth University found that in 2007 Gibraltar businesses bought more than £174 million of goods and services from Spain, residents spent almost £30 million there, and jobs supported by Gibraltar equalled 18% of the 102,468 jobs in the Campo. It estimated that the Gibraltar economy accounted for about 12.2% of the Campo's output that year. The minister's budget speech was cautious about what the treaty would add, and set the government's aim as a place "to do business from, rather than to do business in", with online services still sold into Britain and a new access to the European market for goods. The constitutional side of the treaty is covered under how Gibraltar governs itself.