As the Brexit debate is heating up, experts have started assessing the potential impact of the EU referendum not just on the mainland, but the channel Islands as well. Considering the Channel Islands’ unique status – neither a part of the UK nor the EU, it is worth discussing whether Jersey and Guernsey would be affected by the outcome.
Here we take a look at what the Brexit would mean for Jersey, a leading offshore financial centre.
So 23 June is looming upon us and the Brexit campaign has commenced. The gentlemen amongst us might be desperately scrabbling through diaries trying to remember the wife’s and/or girlfriend’s birthday, wedding anniversaries or other such days of note, but this is the day when finally the result on Britain’s membership of the EU will take place – a day most of us won’t forget. What possible impact could this have on our little 45 square miles of idyllic paradise? Well, given that 40% of Gross Value Added (GVA) to the Island comes from the Financial Services, one might argue quite a lot.
To not quite directly quote Senator Philip Bailhache, and not just him but a few other financial commentators, “we don’t really know but it might be quite bad” seems to be an answer frequently on the lips of many. It could be argued that a lot depends on what is the real view of the Channel Islands from the outside. If Brexit were to happen, it could be a voyage of discovery finding out what our international status really is – a tax haven or a low tax jurisdiction is the rhetoric from the naysayers, despite (correct) reassurance from Mr Cameron and the other 650 fine ladies and gentlemen packed into that building down SW1 way, of our long established, hard earned reputation as a superbly regulated, legitimate jurisdiction in which one may carry out their financial affairs should they wish.
The former would potentially be problematic one might expect. The glass is half empty brigade would maybe suggest that our special status that we have historically enjoyed with founder EU member states does not wash so well with newer, more cynical members; thus making it potentially more difficult to renegotiate this without help from our political older, bigger brother, the UK. I wouldn’t be so sure – having been present at a JFSC seminar last month, I would suggest that the best interests of the Island’s Financial Services industry are already represented in Europe. The JFSC is one of the most respected Commissions in the Offshore world, and the work of Jersey Finance to represent our industry is done with genuine meaning – it is not a propaganda steam train designed purely to induce investment from unsuspecting UHNW clients. A lot of investment has been made by Financial Service Providers in Jersey to comply with FATCA requirements. And by investment we should comprehend that this means more than just the financial aspect – investment in people, knowledge and learning, investment in IT, investment in relationship management with authorities. With CRS imminent, the infrastructure is already in place for openness and transparency whenever the requirement presents itself.
Jersey should embrace this opportunity to open dialogue with the more reticent, junior members of EU, whether Brexit materialises in June or otherwise. We have the chance to stand up for ourselves and remind those who view Jersey indifferently that, yes, agreed, we do not have the political independence from the UK, but we benefit from considerable autonomy, an independent identity and a highly acclaimed status for our Financial Services Industry. This doesn’t happen by accident, far from it, so we should embrace and develop our standing with those who know and understand us. To those more aloof toward us, we should present ourselves to them and encourage the build up of communications and the break down of barriers.
After all, should the glass not always be half full…?
* This article was originally written by Kieron Lambert, former Executive Consultant.