By Colin Lever
ON the face of it, Jersey’s finance industry is the epitome of community wealth building. As a key anchor institution, it is the largest employer in the Island. The JFSC estimated that finance staff spend £1 million a day supporting a wide range of local businesses, from eateries to hair salons and from retail to house maintenance. It sponsors many local events from charities to arts and culture to planting trees to help the environment.
From its humble beginnings in the 1960s, finance in Jersey has mushroomed into an international giant. The December 2024 quarterly report by Jersey Finance showed that there were 34,523 companies registered, dealing with an eye-watering £616 billion.
But there is a darker side to the finance industry. Its very success has created obstacles in respect of community wealth building. At around a £68,000 salary average plus bonuses, it crowds out all competition when it comes to employment, subsequent buying power, and contributes, significantly, to the Island’s inflated cost of living. This creates staffing shortages in key areas such as education, health and social care, forcing the government to pay premium rates for locums to fill the gaps. This, in turn, eats into available monies for infrastructure projects. Without the income from finance would the government’s administration command the second-highest average salaries in the Island (£63k) along with being the second-highest employer?
With higher-than-average disposable income, we all end up having to pay a premium on everything, from childcare to construction and from retail to restaurants. The Island’s RPI in April was 2.3% but to get a measure of the true inflation rate compare our price index with the UK, which is over 20% and/or the average house price, which is twice as much as the UK. Mortgage rates on Jersey are 1% higher than the UK (many employees working in finance get preferential mortgage rates). These inflated prices cannot just be due to the cost of the ferry from Portsmouth to Elizabeth Harbour.
Jersey’s wellbeing is heavily dependent on the finance industry. But what if Jersey falls to the “coal-mining curse”? Like the American Rust Belt or the Aberdeen oil fields. Whole communities built around a single industry. When that industry collapses due to global economic change, everything goes down with it. Ghost towns replace what was once a vibrant community.
We are told that the chances of the finance industry collapsing are thin but the possibility of it uprooting and moving elsewhere is less certain.
In 1970, with tourism accounting for around 55% of GDP, it seemed invincible. We all know what happened next. Its gradual decline is a cautionary tale.
“It may be said that the development of Jersey as a financial centre has brought benefits to the Island and is a valuable diversification of an economy rooted to tourism” (G C Powell, Economic Survey of Jersey. 1970)
What next for Jersey?
The finance industry’s GVA shows a gradual percentage fall in the past ten years. The anchor of zero-ten that denies the Island half of the tax owing is changing to 15%, for some. Yes, the government will get a windfall but with little to keep the financial institutions in situ and with the debilitating cost of living, here in Jersey, what is to stop them moving to a more favourable jurisdiction? The advent of AI is predicted to shrink the workforce considerably. Outsourcing and remote working are nibbling at its edges. Middle Eastern countries are looking to diversify their portfolios and are attracting major investment from the finance industry. The effect of a company’s profits may not be affected but the impact on Jersey via taxation and local services will be considerable.
We are told that the Island needs to diversify its economy. How can it do that if it does not have the workforce with the necessary skills? Neither it seems is there a will from government to do so. Those in control seem content to pay allegiance to the cash cow that is finance, hoping something will “turn up” eventually.
Finance sponsors arts and cultural events, sports, as well as aiding hospitality. Could it do more? Should it do more? Most of the financial companies are not Jersey companies, so why should they reinvest more of their hard-earned profits in the Island? Yet some do. HSBC has handed over £300,000 to the Blue Marine Foundation. An international NGO that is supporting the development of Jersey’s marine park. The government-controlled Jersey Community Foundation acts to match philanthropists with local causes. It has already passed on £2.6 million in donations. There are many small-to-medium infrastructure and societal challenges that would benefit from reinvestment by the finance sector.
- Refurbishing empty homes for the homeless.
- More nurseries to reduce pressure on existing stock.
- Specialised hospital equipment to reduce waiting times.
- A one-stop shopping website for local businesses.
- Inclusion units in all schools.
- Development of post-16 technical education.
- Completion of an interlinked cycle/walking network.
- Farmers markets and craft fairs.
There have been attempts in the past to establish a credit union in the Island. Credit unions are small, local, banking enterprises that give competitive rates of interest to both investors and small businesses. Across Europe, local banks are very popular. Here, in Jersey, they are anathema to the finance industry. Local outlets are being closed along with the availability of ready cash.
These are important projects that our government would like to carry out but does not have the financial resources to instigate. All would contribute to the local economy, creating jobs and supporting the Island.
I will leave the last word to Mr Powell in his 1970 economic survey.
“The Island as a whole, as well as the financial community, stands to gain from the continued development of Jersey as a responsible, thriving, and profitable finance centre, providing the benefits of the individual banks and financial institutions are properly reflected in the benefits derived by the rest of the Island. States policy in this sector should be directed towards achieving this balance.”
Colin Lever is a retired teacher and education specialist, SEND consultant, and commentator on educational and community issues. He also contributes musically to Repair Cafés and charity events and is currently writing and producing a comedy sitcom podcast.
