Having negligible natural resources and few natural freshwater resources, limited to natural wells in the north, until recently Gibraltar used large concrete or natural rock water catchments to collect rainwater. Fresh water from the boreholes is nowadays supplemented by two desalination plants: a reverse osmosis plant, constructed in a tunnel within the rock, and a multi-stage flash distillation plant at North Mole.
Gibraltar’s terrain consists of the 426-metre-high (1,398 ft) Rock of Gibraltar[68] made of Jurassic limestone, and the narrow coastal lowland surrounding it. It contains many tunneled roads, most of which are still operated by the military and closed to the general public.
Economy:
The British military traditionally dominated Gibraltar’s economy, with the naval dockyard providing the bulk of economic activity. This, however, has diminished over the last 20 years and is estimated to account for only 7 per cent of the local economy, compared to over 60 per cent in 1984. Today, Gibraltar’s economy is dominated by four main sectors: financial services, online gambling, shipping, and tourism, which includes duty-free retail sales to visitors. The territory also has a small manufacturing sector, with one company (Bassadone Automotive Group) supplying ambulances and other project vehicles converted locally from SUV vehicles to the United Nations and other agencies, employing some 320 staff across its range of activities.
Gibraltar’s labour market shows an extremely low unemployment rate of around 1 per cent. Nearly half (46%) of the total employment is covered by frontier workers (employees who are normally resident in Spain but are employed in Gibraltar), the large majority of them (59%) of Spanish nationality.
In the early 2000s, many bookmakers and online gaming operators moved to Gibraltar to benefit from operating in a regulated jurisdiction with a favorable corporate tax regime. This corporate tax regime for non-resident controlled companies was phased out by January 2011 and replaced by a still favorable fixed corporate tax rate of 10 per cent.[81]
Tourism is also a significant industry. Gibraltar is a popular port for cruise ships and attracts day visitors from resorts in Spain. The Rock is a popular tourist attraction, particularly among British tourists and residents in the southern coast of Spain. It is also a popular shopping destination, and all goods and services are VAT free, but may be subject to Gibraltar taxes. Many of the large British high street chains have branches or franchises in Gibraltar including Morrisons, Marks & Spencer and Mothercare. Branches and franchises of international retailers such as Tommy Hilfiger and Sunglass Hut are also present in Gibraltar, as is the Spanish clothing company Mango.
A number of British and international banks have operations based in Gibraltar. Jyske Bank claims to be the oldest bank in the country, based on Jyske’s acquisition in 1987 of Banco Galliano, which began operations in Gibraltar in 1855. An ancestor of Barclays, the Anglo-Egyptian Bank, entered in 1888, and Credit Foncier (now Crédit Agricole) entered in 1920.
In 1967, Gibraltar enacted the Companies (Taxation and Concessions) Ordinance (now an Act), which provided for special tax treatment for international business. This was one of the factors leading to the growth of professional services such as private banking and captive insurance management. Gibraltar has several attractive attributes as a financial center, including a common law legal system and access to the EU single market in financial services. The Financial Services Commission (FSC), which was established by an ordinance in 1989 (now an Act) that took effect in 1991, regulates the finance sector. In 1997, the Department of Trade and Industry established its Gibraltar Finance Centre (GFC) Division to facilitate the development the financial sector development. As of 2012, Gibraltar has 0.103 Big Four accounting firm offices per 1,000 population, the second highest in the world after the British Virgin Islands, and 0.6 banks per 1,000 people, the fifth most banks per capita in the world. As of 2017, there is very significant uncertainty on continuing access to the EU single market after the forthcoming Brexit.