LET’S start with the good news, shall we? Jersey is, according to informed sources, in a better position than Guernsey. For more detail on that, just take a look at this newspaper’s sister publication, Business Brief.
There, accountant Richard Hemans takes his annual look at the economies of the islands and analyses the differences between them. Illuminating it is too, as it confirms in an easy-to-read manner what I’ve been saying here on and off – that the islands do things very differently.
Mr Hemans explains this: Jersey has been spending while in recession to stimulate things, but Guernsey has been cutting back, thereby making matters worse.
His look at the islands, however, is based on published material and is an excellent review of what’s happened. Coincidentally, the global ratings agency Standard and Poors, which provides high-quality market intelligence, has been peering into its crystal ball to predict what now lies ahead for these islands.
The bad news is that it’s not very encouraging.
While both islands have strong economies and are comparatively wealthy, Hemans’ analysis shows that wealth, as measured by gross domestic product, is a relic from past glory days.
As he puts it: ‘Jersey’s economy is not much bigger than it was in 1998 and again in 2007, since when the size of the economy has shrunk by more than £400m. Or about 9%.’
That’s worrying, but at least your States has been trying to stimulate things a bit while ours has been busily making things worse. S&P forecasts Jersey’s economy will have grown by 1.2% in 2017, slightly up from its previous review. By contrast, any growth seen by us last year will be restricted to 0.5%.
Anyway, that’s then. What about now and in the future?
‘Beyond 2017, however, we expect economic uncertainty to increase and growth to stagnate,’ say the S&P pundits. And it’s the same for Guernsey.
The reason – no prizes for guessing – is Brexit and the uncertainty that’s causing for the City of London and, by extension, these islands. Protracted negotiations or a ‘hard’, disorganised, Brexit could damage the ability of Jersey’s financial service organisations to operate effectively or efficiently and damage growth prospects. It’s the same for Guernsey, of course.
At the same time, however, both islands have some opportunities to take advantage of and build on their existing ‘third country’ relationship with the EU – but doing so is likely to be delayed until the UK’s own rights of access are established after Brexit, whenever that might be.
Well, so far, so esoteric, and apologies for the lumpiness of this. Because the underlying point I really wanted to make is pretty simple.
Things for many islanders are worse than they were before the 2008 crash and S&P is forecasting that things will deteriorate further for at least the next four years to 2021.
As Mr Hemans puts it: ‘This represents significant paralysis and stagnation in living standards, and will eventually lead to social and political tensions as the people become frustrated and angry at the lack of progress and improvement.’
I think that those signs of unrest are already detectable in both islands. Improvements could be achieved by the Guernsey States pursuing a policy of redistributing wealth from the more to the less affluent, while Jersey could continue to increase its population.
For Mr Hemans, however, these are purely short-term measures and can only be counter-productive in the long-term.
‘Both islands face immense structural challenges in the shape of Brexit, the framework of government, an ageing population, external pressures on their finance sectors, falling productivity and fiscal deficits,’ he says.
This has to be met through cultural change in the States and the wider population, fiscal stimulus, investment in skills, entrepreneurialism and infrastructure, wider labour force participation, a review of trading and political relationships with other jurisdictions, further and deeper reform of the system of government, tax reform and the broader embrace of technology, he concludes.
Quite a list. And yes, it’s achievable, but will require enormous skill and focus by government and an acceptance by both States Assemblies of what their number one task is for the year.
I don’t know if you remember Your Life in their Hands, the BBC TV documentary series which ran on and off from 1958 to 2005, but that’s pretty much where we’re at now – entirely dependent on politicians and civil servants for our financial health and wellbeing.
What they’re dealing with, of course, isn’t treatable with a kind word and an aspirin. We’re in open heart surgery territory here. One slip and all that…
So my advice to us, the unwilling and timorous patient, is to make sure they remain attentive to the task in hand – not easy when you’ve got elections in May and our own Assembly is riven with factionalism and competing rivalries.
Which means you must keep your Deputy’s email address and mobile number to hand. And every time they stray into trivial, pointless or politicking areas, nudge them and ask them how it’s getting us through Brexit or improving the economy, would you?
Like you, this is a wealth/health scare I’d quite like to get through in one piece.
