Jersey’s Brexit opportunity
Global investment, a third-country status with the EU and strong ties with France ensure the island is well positioned to take advantage of Brexit, finds Carla Passino
The island is well positioned to make the most of the changes ahead, believes Carla Passino
Brexit happened to Jersey. As the island is a Crown Dependency, only residents who had lived in the UK within the 15 years preceding June 23, 2016, could vote in the referendum, so many locals didn’t have a say. And although opinion was divided, many native Jerseymen would have liked Britain to stay in the eu. ‘We share a culture with Normandy,’ says Dominic Jones of JP restaurants, a Jersey businessman with a finance background. ‘One of the saddest things about Brexit was realising it was putting potential barriers between us and France.’
Now that the decision has been taken, however, Jersey is ready—and very well placed —to make the most of this momentous change. ‘People have become reconciled to the result and are now looking at what opportunities there may be,’ says Sir Philip Bailhache, the island’s Minister for external relations. ‘i think there are certainly a number, particularly in relation to trade.’
Over the centuries, adds Mr Jones, Jersey has often had to grasp openings as they presented themselves and Brexit is no different. ‘We’ve had many times when macroeconomic events around the world challenged our economy. each time, we’ve had to think about something to do. We have the ability to adapt and that, i think, is our biggest opportunity.’
that said, Jersey has an additional advantage this time round—it already has strong ties with non-eu countries, whereas its trade with the eu is relatively limited. For example, in finance, which is the island’s main economic driver, only 16% of investment comes from within the eu, with 40% coming from the UK and 44% from outside the bloc. ever resourceful, the Jersey government is already beginning to build on these extra-european links.
‘We are currently seeking an entrustment from the UK to negotiate bilateral investment treaties with other countries and i hope it’ll be given it quite soon,’ explains Sir Philip. ‘the purpose is to lay the foundation for greater business with areas we are interested in: the Gulf, particularly the United Arab emirates and Qatar, and places in Africa.’
Nor will these global deals preclude doing business with the eu because, as Sir Philip points out, nothing fundamental has changed in Jersey’s own relationship with the bloc. the Channel islands trade goods freely with the eu under a protocol of the UK’S Accession treaty, but are considered third countries for everything else.
thus, if the eu and the UK reach no agreement by April 2019, the free circulation of agricultural and manufactured products will stop, but all the other rules governing trade between Jersey and the eu will remain in place—including, crucially, those that allow local financial companies to access the eu market.
indeed, financial-services trade with the eu may even improve in the near future. Last year, the island received the green light from the european Securities and Markets Authority to apply for an Alternative investment Funds passport. Although the european Commission still needs to give the go-ahead for it to be issued, this should eventually make it much easier for Jersey’s firms to sell and manage funds throughout the eu.
Other local industries could also see an increase in european—as well as global— trade. the island has already enjoyed some
success in boosting its appeal as a tourism destination in Germany and, recently, Austria, where many Jersey residents go skiing. ‘The Austrian ambassador was in Jersey a couple of days ago and we were talking about the possibility of developing a tourism link,’ says Sir Philip.
‘There are a number of countries where we’d like to [do that]. The exchange rate is a good thing because the weakness of the pound means it’s cheaper for Europeans to come to Jersey.’
That said, if relationships between the UK and the EU turn sour, the island would obviously face some challenges. For example, should the UK leave the customs union, it would severely affect Jersey fishermen, who export much of their catch to France. Jersey’s own rapport with the bloc could also become a little problematic, according to Sir Philip, because the island is often perceived as an extension of Britain.
However, the local government would move to remedy that. ‘We’d find it a challenge to develop a separate relationship [with the EU], but we’d certainly be trying to do that.’
Jersey’s excellent regional links with Brittany and Normandy already provide a solid foundation to build deeper ties with France and, eventually, the rest of the EU. ‘Jersey is part of the French-speaking Parliamentary group, we’re talking about starting a bilingual State primary school, we have a French consulate here and our own Channel Island office in Normandy,’ explains Mr Jones.
‘Normandy will be a strong supporter of ours. Because of our constitutional relationship with the UK, we’re waiting to see the outcome [of the Brexit discussions]. But if we don’t get what is of interest to us, we will go and start negotiating separately.’
At a time when the idea of a second independence referendum has been mooted in Scotland, would Jersey ever consider going solo? Highly unlikely, according to Sir Philip: ‘There’s no plan for independence at the moment. Circumstances would have to change very badly for that to become a possibility.’
‘We have the ability to adapt and that, I think, is our biggest opportunity’