Last week Statistics Jersey released figures indicating that the Gross Value Added – economic output or goods and services produced – of Jersey’s largest industry declined by two per cent in 2017, a similar level to the previous year, and had slipped by more than 30 per cent over the last decade.
Mialy Oporia, a spokeswoman for Jersey Finance, said that the decline, which was also reflected in productivity – worked out as GVA per worker – had been due to the tough global economic climate, uncertainty and increased regulatory burdens on the sector.
‘The reality is that the world is very different now to what it was ten or twenty years ago,’ she said.
‘We’re finally emerging from a decade-long global economic crisis, we’re operating with far more regulation, and there is a fair amount of uncertainty, particularly in Europe, around Brexit. All that has an impact and we are not immune to it.’
She added, however, that the finance sector continued to be a ‘major contributor’ to the Island’s economy with 800 more jobs expected to be generated over the next five years, more than 80 per cent of which should be for local people. Last week’s figures indicated that the economic decline in finance was particularly driven by falling output in the banking sector.
Ms Oporia said that banking has ‘gone through a challenging time’ over the past decade due to consolidation in the sector, rafts of new regulation and low interest rates, which had eaten into profits.
She added, however, that Jersey’s banking sector had been ‘pretty resilient’ compared to elsewhere and continued to be the ‘engine room of our industry’.
‘Parent groups of the Island’s banks continue to find it attractive to raise deposits through Jersey to improve their bank-wide liquidity,’ she said.
‘Growth is also emerging from Africa and Asia, for example, where wealthy domestic clients are looking to invest outside their home countries, and are attracted to Jersey as a reputable international finance centre with high regulatory standards. More widely, it is clear that the increased requirement for regulation and information exchange has affected productivity, and we’ve seen steady growth in regulatory and compliance staff.’
Ms Oporia said that positives could be taken from the fact that certain sub-sectors – such as accountancy and trust, company and fund administration – had performed well in contrast to banking. However, she added that work needs to be done to improve productivity generally.
‘Overall, the reality is the cost of business is rising and firms are needing to work harder than ever to generate the kind of revenues they used to before the crisis,’ she said.
‘What is vital now is that we focus as an Island on giving our young Islanders the skills they need to work in our industry, on upskilling the workforce and on attracting the kind of high calibre skills to the Island that can help add greatest value to our economy. When our finance industry does well the Island does well, so this is really important.’
The finance industry’s contribution to Jersey’s economy:
* 13,000 employees (having recovered to the levels before 2008’s global financial crisis)
* £370 million spent on goods and services in Jersey
* £420 million contributed in taxes