A distinct lack of light at the end of the tunnel

Granted, the responses from the finance industry were notably more positive in December than they were in September regarding two of the ten factors measuring current trading – incoming new business, and ‘business optimism’ (for the overall situation in the sector).

However, like the cats of the advertising world, this leaves eight out of ten factors to be less than positive about, including some of the most important – current business activity, level of ‘capacity utilisation’ (whether workers are busy or twiddling their pencil sharpeners), average prices charged for products, profitability (a key question which relates heavily to the States’ tax take) and number of people employed.

As for the non-finance sectors, not one among them is more positive now than in September. Those who are finding things significantly more difficult are the construction, wholesale and retail sectors – although perhaps after this week’s news that J-category licence holders will be able to buy properties, developers and builders may be feeling a little less jaded.

Of course the survey is, by its nature, simplistic. The questions only ask firms if their current situation and forecasts are ‘higher, the same, or lower’ than three months previously. Therefore the responses are based on what the statisticians call qualitative information, rather than pounds and pence or actual numbers of employees.

The other thing to note is that this is only the second time this survey has been carried out in the Island, so there is as yet no annual comparison. But apart from the Jersey Chamber of Commerce members’ survey, it is the only benchmark of its type which records the rises and falls of business in Jersey – and more than 340 firms bothered to complete it, which between them account for nearly half of the Island’s workforce.

Looking wider afield, one of the more significant forecasts to come into my email box this week, from the Investment Management Association, indicates that the finance industry overall will have its work cut out this year. The IMA’s investor confidence index records that investors are distinctly less bullish than they were six months ago, with risk appetite having dropped particularly among older, wealthier investors.

At the same time, the UK’s Confederation of British Industry/PricewaterhouseCoopers overview expects no further growth in 2010 for the UK’s financial services industry, despite the slight upturn of the last quarter.

Given that Jersey’s banking industry feeds through to the City of London, this is likely to have some impact locally.

As Economic Development Minister Alan Maclean commented last week, lower profits mean lower tax receipts. No doubt the States Treasury will be taking note.

Help at last to keep the ruthless fraudsters at bay over investments

HOW nice to see that the Jersey Financial Services Commission has at long last launched a ‘campaign’ to make sure that we are not getting fleeced by the Island’s smattering of independent financial advisers.

The JFSC’s attempt to alert us to these follies follows the shocking case involving a firm called Alternate Insurance Services, which somehow managed to get away with persuading 27 Jersey families to put their money into policies heavily dependent on the rises and falls of the stock market.

Three banks allowed these families – including retired people – to take out mortgages without going through the usual vetting procedures, and then demanded increased payments when falling markets left shortfalls on their Traded Endowment Policy products.

Our financial regulator will have been especially keen to launch this campaign because last year, as you may recall, the Economic Development Minister decided that in the absence of any proper compensation scheme, the States should provide a one-off pay-out to the aforementioned 27 investors of up to £48,000 each, costing the public purse around £600,000 in the process.

That said, it is a sensible move which, coupled with the new depositor compensation scheme, goes some way towards providing Islanders with the protection afforded to other ‘civilised’ jurisdictions.

Age-old questions for future politicians

I MAY have alluded before to the States tendency to fail to look ahead.

Well, the officers at the Social Security department have clearly been doing their share of that ‘blue sky thinking’ with which jargon lovers are so preoccupied, and their conclusions for the next 30 years or so have now been made public.

By the time I and my contemporaries reach our 80s, there will be around 10,024 of us cluttering up the Island with our Zimmer frames – nearly three times the current number. Many of us will need assistance with daily living and many will need full-time residential care.

In truth, this is a statistical certainty of which economists have long been aware. I recall listening to a presentation some time ago which predicted that most of the established western economies would find themselves in a similar position in the next 15 to 20 years.

The culprits, of course, are better health care – leading to longer life expectancy – and healthier standards of living. In India, where fewer people are expected to live into their 80s, there are still many more younger people than older people to provide the working population needed to sustain the country as a whole.

However, in the west, the number of older people will continue to increase in comparison to the working population, leaving a potential gaping hole in the States pension provisions.

The chances are, therefore, that those of us who are working will be asked to work later in life – I think 74 is the highest suggested retirement age to date – and paying more when we are working to provide the wherewithal for support later on.

The other question is, how much the Island’s population will increase, and how much it can afford to increase. This week’s States decision to enable essential workers to buy their own homes will certainly have a bearing on this. Perhaps the Chief Minister should set a new ceiling on population growth, and 100,000 may not be too wide of the mark.