Guernsey’s Chief Minister and President of the Policy and Resources Committee, Deputy Gavin St Pier, writes for Business Eye CI about the opportunities and challenges ahead in 2018, and why Guernsey’s unique relationship with both the UK and Europe makes the island a ‘good neighbour’:
Guernsey’s offer is stability, quality and competitiveness. A clear and compelling offer that is well understood right across the globe. And one that will be stronger than ever in 2018.
During a meeting relatively recently with the Ambassador from one of the world’s major economies, the Ambassador told me that Guernsey’s strategic position was almost too good to be true: part of the British Isles and part of the sterling zone but not a part of the United Kingdom; a strong cultural, geographic and business relationship with Europe but not part of the European Union; and with deep historic and trading links across the world.
Aside from the happy accident of geography, it has taken determination, vision and investment to develop that strong strategic position. Guernsey’s government is absolutely committed to maintaining that strong strategic position, and that clear and compelling offer of stability, quality and competitiveness. Guernsey’s stability comes from its historic ties with the British Isles, London and the City.
As a Crown Dependency, we exercise a large degree of autonomy. That includes our own legal, fiscal and judicial systems. We receive no funds from the UK or the EU and have the responsibility for funding all our own public services by raising our own taxes. We are able to maintain low taxes alongside high quality public services by keeping government lean. The financial watchword of our government is ‘prudence,’ which is reflected in the fact that we run a balance budget and have our own sovereign wealth fund investing our surplus reserves.
We also have a commitment as government to continue to meet global standards – recognised and validated by international bodies such as the OECD, the IMF and the Council of Europe. This puts us in the forefront of international finance centres, providing certainty and stability.
In December 2017 in Brussels, the EU Council of Finance Ministers, ECOFIN, formally reaffirmed Guernsey’s status as a cooperative jurisdiction. This clear reaffirmation from the EU that Guernsey is a cooperative jurisdiction is very welcome, fully justified and should be of no surprise to anyone who knows us.
Indeed the EU Tax Commissioner Pierre Moscovici described us as such in 2016, and the ECOFIN decision was based on a recommendation by the EU’s Code of Conduct Group on Business Taxation, the Code Group, with whom the government of Guernsey had been actively engaged in an evaluation process throughout 2017.
Guernsey is choosing to continue to meet EU tax good governance standards, and Guernsey is a good neighbour and trading partner to the EU. We provide a vital role in ensuring the efficiency of global capital markets, including as a funnel for foreign direct investment into the EU and UK. We have nothing to hide, and we should be loud and proud of our contribution to the UK’s economy directly and its exchequer indirectly.
Our funds sector funnels £25bn of foreign direct investment into the UK strengthening its capital account; the UK financial services industry receives significant revenues on the back of our finance sector – £1.1bn from investment management fees alone, strengthening the UK’s current account. Tens of thousands of UK jobs – contributing to the UK exchequer – depend on what we do and our doing it well. We are working closely with CityUK, and it is understood that we are a vital part of the UK’s post-Brexit prosperity.
Brexit will bring many changes – but what it will not change is the strong and mutually beneficial relationship that Guernsey has with the British Isles, the UK and the City of London.
Similarly Guernsey’s approach on financial services with the EU will not change. It will remain based on equivalence, and Guernsey has already stated its commitment to meeting the EU’s new data protection regulation to provide further stability.
Guernsey’s quality has developed over many years, and you will read more about that in this publication.
Our focus on trust and fiduciary, insurance, investment management and banking has helped us to develop a professional services infrastructure that is second to none, and which in terms of quality outshines many larger jurisdictions.
Our regulator has developed a well-deserved international reputation for excellence, and for supporting innovation and quality, and provides leadership on international bodies which set regulatory standards.
The Guernsey-based International Stock Exchange also goes from strength to strength, providing a responsive and innovative listing facility for international companies to raise capital from investors based around the globe.
Guernsey’s competitiveness is multi-faceted. Built on the foundations of stability and quality, Guernsey is a jurisdiction that recognises and supports innovation – whether it is fintech, cyber-security or the development of new products such as protected cell companies (PCCs) and private investment funds (PIFs).
Guernsey’s corporate tax regime is compliant with international standards, and is supported by a commitment from the government in Guernsey not to introduce capital taxes on gains, wealth or inheritance.
Guernsey is open for business – and to reaffirm this, the government in Guernsey has recently streamlined the processes for business-related work permits. This means that where expertise does not currently reside in Guernsey, it can be brought in more readily.
Guernsey has never stood still, and will continue to invest in its infrastructure, to further strengthen our data connectivity and transport connectivity, ensuring we are even better connected to global markets.
These are challenging times for the global economy. Of course, with challenges come opportunities. Built on stability, quality and competitiveness, Guernsey is the ideal place from which to take advantage of those opportunities in 2018 and beyond.
You can follow Deputy Gavin St Pier on Twitter and find out more about him here.
