Gibraltar And Brexit: How EU Referendum Could Rattle The Rock

The British Union Jack flies over Gibraltar
The British Union Jack flies over Gibraltar

GIBRALTAR â€" There is a troubling side story jutting into the Brexit debate from this tiny British territory at the southern tip of the Iberian peninsula.

Madrid-based daily El Mundo reports that in Gibraltar â€" affectionately known as “the Rock” â€" locals and the government alike are opposed to “Brexit”, a British exit from the European Union, which is up before a national referendum this summer.

The territory, home to a British military base, has been under British control since 1704. Every day, around 10,000 workers cross the border from Spain to work in Gibraltar, which has open borders with Spain thanks to the UK’s membership in the EU.

The Rock maintains its own autonomous parliament and fiscal regime, a solution that locals consider the best of both worlds between the UK and Spain, which still holds an outstanding claim to the territory.

But if Gibraltar’s 30,000 inhabitants are dragged out of the EU by their compatriots 1,200 miles away â€" even if they vote to remain in their own local referendum â€" they will lose the right to free movement across the border to Spain, and trade will become subject to border controls.

“We are more protected within the EU,” says Natasha Passano, a local schoolteacher, to El Mundo.

The debate has grown tense as Gibraltarians, known as llanitos, consider the repercussions a vote could have on their lives. “I will vote to remain in the EU,” says Daniela Caruana, a pharmacist. “My boyfriend works here but he is from across the border, and we live in Spain because the rent is cheaper there.”

Gibraltar’s government is a strong supporter of remaining in the union, and Chief Minister Fabian Picardo recently warned that Brexit could rekindle the long-standing diplomatic conflict between Spain and the UK over ownership of the territory. Spanish authorities declared that if Britons were to decide to leave the bloc, the matter of sovereignty would have to be discussed immediately.

When British voters go the polls on June 23rd, they could decide the fate of this centuries-old possession. “I don’t think the Spanish would erect a border fence,” says a shopkeeper. “But we would be in limbo.”

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Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum


SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.

It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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