Finance: Transport links may give Jersey edge on Guernsey
BUSINESSES are likely to choose to base themselves in Jersey rather than Guernsey in the future if transport links to the northerly isle do not improve, a Sarnian business panel leader has said.
Tony Mancini, chairman of the Guernsey International Business Association, made the comments in the Guernsey Press and cited a change in the way business was conducted.
He also referred to economic substance regulations – which require managers of funds to prove that they are directed and managed in Jersey in relation to that activity, with a proportionate number of employees, expenditure and physical assets.
Mr Mancini said: ‘The unfavourable comparison with Jersey is crucial because of two wider and inter-connected developments in financial services. Firstly, the new economic substance rules on both islands will require more business activity to take place on-island.
‘This will necessitate more travel to Guernsey and Jersey. When a client has no other reason to choose one place over the other – and increasingly there are few differentiating factors – then they are likely to choose to put their business in the location to which they can travel the easiest.
‘Unfortunately, more often than not, this will be Jersey.’
Mr Mancini, who also works for KPMG as a tax partner, added that the changing way in which businesses were administrated also worked against Guernsey.
‘Five years ago, we had many locally-owned [Guernsey] and managed businesses who would automatically bring business to their home island. Now, those businesses are part of a global group with offices in most offshore finance centres and a centralised management function,’ he said.
‘It is uncommon for those management functions to be centralised in Guernsey. This means that new business is likely to gravitate to the location where the service provider (the administration business) has greater capability, where it is easier to do business and where it is easier to travel. More often than not this is not going to be Guernsey.
‘The real worry is that, if we cannot solve our air links problem soon, Guernsey will rapidly become an outsourcing centre for Jersey.’