Jersey’s Harris warns of potential knock-on effects to Jersey of Brexit’s impact on UK
John Harris, director-general of the Jersey Financial Services Commission, has told a recent Institute of Directors gathering that although Jersey’s financial services industry is “doing well” at the moment, it could be affected down the road if the City of London suffers a serious downturn as a result of Brexit, or other hard-to-predict geo-political issues currently in play.
Harris’s comments earlier this week were reported in the Jersey Evening Post, which acknowledged that he regards Jersey’s “most important sector” to be largely doing well, part from certain areas, such as banking.
“If you ask me what our financial services industry will look like in three years’ time, I would say that it is impossible to answer,” the publication quoted Harris as saying.
“Three years ago we were still in the aftermath of the financial crisis, but now we seem to be recovering.
“But since then we have had Trump, we have had Brexit, and we have had Macron. So there is a lot of uncertainty, and how this will affect our dominant industry over the next three years is very difficult to say.”
Harris went on to say that the industry was “doing well at present in the trust and fund sectors, despite a decline in the banking sector”, the JEP article goes on to say.
In a telephone interview, Harris elaborated: “If you were to consider the future of Jersey’s financial services industry, based on how it looks today, things look very rosy. The industry’s GVA [gross value added] numbers have been pretty decent for the last year or two; and the activity levels that we’re seeing, and the new businesses that are coming to the island, in most areas outside of banking – which is being challenged everywhere – the island’s doing just great.
“But there are things that are external to Jersey that we can do nothing about, Brexit being the obvious example.
“If Brexit affects the City of London, and the City of London loses people, loses jobs, loses demand, loses transactions and business…that may well have an effect on Jersey. You can’t rule that out, down the road.”
The JEP‘s report comes a little less than a month after the States of Jersey’s Statistics unit reported that the economic output of Jersey’s finance industry, as measured in terms of GVA had fallen by almost 30% since its pre-financial global financial crisis peak in 2007, with its banking sector particularly hard-hit. (See chart, below.)
That report, which noted that Jersey’s finance sector, as measured by total GVA, declined by 2% in real terms in 2016, “driven by a real-term decline” in its banking sector. However, the “combined trust and company administration and legal sub-sectors recorded a real-term increase” in gross value added, the data showed.
GVA of Jersey’s finance sub-sectors in real terms
2007 – 2016 index numbers (2013=100)
Source: States of Jersey’s Survey of Financial Institutions: GVA and productivity, 2016
(p) = provisional