JERSEY can take control of its economy to insulate it from poorer global economic outlooks, according to the government’s chief economic adviser Tom Holvey.
Ahead of Economic Development Minister Kirsten Morel’s publication of the Future Economy Programme later this month – setting out an economic course for the next ten-to-15 years – Mr Holvey described the Island’s potential as “immense”, adding that he was optimistic about Jersey’s future.
“For the medium term, we can have a control over our economy. We will always be to some extent subject to the global and UK economic position – that’s the way the global economy works – but we are certainly not helpless.
“We can make choices on the Island for what we want the economy to look like in the future and act on them to take control of that future. There will always be ups and downs in terms of the global economic outlook’s impact on us but, from a long-term trended point of view, we can act to grow the economy without population growth, and we can act to increase productivity,” he said.
Mr Holvey was commenting in the wake of the Bank of England’s recent decision to hold interest rates at 5.25% in response to a fall in inflation which it is hoped will also been seen in Jersey this month when figures for the third-quarter are published.
But although the UK is the Island’s biggest trading partner – with interest rates common to both economies – Mr Holvey stressed the differences between the two economies and, in particular, Jersey’s capacity to be “master of its own destiny”.
“Jersey starts from a different position to most other western democracies. Most are not looking at the problems ahead in quite the same way and it’s going to hit them all. Most have considerable debt in place and that weakens their starting position. We don’t have that and, as such, have opportunities that other economies don’t to try and grow our economy,” he said.
The chief economic adviser’s optimism is partly founded on the buoyancy of the financial services sector, and the fact that fears of a recession in the UK were “not particularly focused on financial services” where the Island’s close links lie.
“If there was a slowdown in the financial services sector in the UK, you might see some of that knock on to Jersey and cause a slowdown in the economy with financial services being a significant part of our economy – that’s the risk but it doesn’t look like that’s specifically happening. There were some rocky moments around year ago – following the last UK government’s announcement of its budget and the interest rate rises – around the financial markets and particularly bonds and pension schemes but it feels like they have gone away to some extent,” he said.
Mr Holvey would not comment on the content of the Future Economy Programme ahead of its impending publication but he reiterated the importance of maintaining the strength of the financial services sector while also “understanding that every other part of the economy has a really important role to play alongside”, and of looking also at potential new sectors such as renewable energy.
“Making sure we know what our comparative advantages are in certain areas is really important – where can we succeed in areas that other economies can’t. Renewable energy is a really good opportunity because we’ve got the waters around our shores, good wind, tidal and solar. What you choose to do with them is a different matter but, from a starting point, we have the natural resource that we can take an advantage of,” he said.
Central to the forthcoming Future Economy Programme is the need to address the Island’s changing demographic – what Mr Holvey describes as a “significant bump in the road” – by growing the economy and increasing productivity.
“It does not mean working many more years or longer hours; it means working smarter and getting more out of the same you are putting in. By definition, productivity does not increase if you just work longer hours. It becomes a really important story in the Island because it does link back to labour and the amount of people doing work within an ageing population, a changing demographic and within the population constraints of a small Island,” he said.
