Gibraltar in 2025: Historic EU Treaty and Economic Transformation Mark New Chapter
Landmark EU Agreement Reshapes Gibraltar’s Future
A groundbreaking political agreement has been reached between the UK, Gibraltar, and the EU, which protects British sovereignty, UK military autonomy, and secures Gibraltar’s economic future. The agreement, announced on June 11, 2025, resolves the final major unresolved Brexit issue, particularly concerning border controls between Gibraltar and Spain.
Under the new arrangements, Gibraltar will participate in the Schengen area for free movement, with Spanish border officials conducting Schengen entry checks at Gibraltar’s airport and seaport, alongside Gibraltar’s own border agents. This arrangement will particularly benefit approximately 15,000 daily cross-border commuters.
Economic Developments and Infrastructure
In a significant development for Gibraltar’s economic future, the government is supporting a £1.8bn data centre project at the port of Gibraltar. This initiative, overseen by Pelagos Data Centres, is set to become one of the island’s largest infrastructure projects, representing a transformative step for the territory’s digital and economic landscape.
The territory’s financial health shows strong indicators, with Gibraltar forecasting a £5.3m surplus for 2025/26. The previous year demonstrated robust performance, with a surplus of £9.782m – triple the forecast – and record income tax receipts of £474m, split between personal (£262m) and corporate (£212m) taxation.
Sovereignty and Security Considerations
The agreement explicitly maintains UK sovereignty over Gibraltar unchanged. The UK government has emphasized that Spain will have no jurisdiction over Gibraltar’s internal governance, immigration enforcement, law enforcement, judicial system, or taxation.
The UK Strategic Defence Review 2025 continues to underscore the importance of maintaining the UK military presence in Gibraltar, particularly for maritime force protection operations and upholding the sovereignty of British Gibraltar Territorial Waters, while serving as a strategic base at the western entrance to the Mediterranean.
Looking Ahead
The political agreement is currently in its legal drafting and ratification phase, requiring approval from the UK Parliament, Spanish Cortes, EU Council, and European Parliament. The process is expected to take several months, during which transitional arrangements will remain in place.
