FOR years we’ve been convinced of the benefit that Jersey brings to the UK economy. The island’s finance industry is diverse, robust, and exceptionally international, but we’ve never had the data to prove just how significant it is. A new report, however, commissioned by Jersey Finance and published this week, highlights exactly the contribution Jersey makes to the UK economy.
It is the first time an independent study of this depth has analysed the role of one of Britain’s Crown Dependencies. The results may surprise some of the harsher critics of offshore jurisdictions, since the figures make clear that Jersey – on its own – is easily a net contributor to UK finances.
A few of the headlines figures tell the story. Jersey helps the UK generate around £2.3bn in tax revenues each year and supports 180,000 British jobs. Around £1 in every £20 invested by foreign individuals and companies in assets located in Britain reaches the UK via Jersey, and the contribution from Jersey banks to parent operations in the UK represents 1.5 per cent of the funding of the whole UK banking system. The study, undertaken by Capital Economics, also revealed the surprising statistic that 5 per cent of the entire stock of foreign-owned assets reaches the UK from Jersey.
Around 30 per cent of investment through Jersey originates from outside the London timezone. And the study concludes that, if Jersey were not available to facilitate these funds, they would most likely gravitate towards New York, Hong Kong or Dubai to the detriment of London.
Critics make claims about the level of tax evasion and tax avoidance allegedly undertaken through Jersey and other offshore jurisdictions, often quoting figures which have not been substantiated. So Capital Economics has dug deep into the Jersey finance industry to ensure that this issue is better quantified. The broad conclusion is that more British tax is generated by Jersey than is lost through it by a substantial margin. Tax evasion in 2011 was estimated to be no more than £150m and, while still unacceptable, is set to fall substantially following the information-sharing agreements Jersey has signed. But the amount is far outweighed by the tax receipts that are obtained from Jersey-generated activity – in the region of £2.3bn per annum.
Jersey’s treasury minister, senator Philip Ozouf, who was in London yesterday to launch the findings, wants greater recognition for the contribution. “In meetings with government, it was clear that properly-constituted research to demonstrate Jersey’s positive contribution to the UK would be helpful”. Now we have a report that identifies Jersey’s symbiotic relationship with the UK. It shows the benefit to the UK of having a well-regulated international finance centre bringing global investment to UK business, infrastructure and the City.
Most of our colleagues in the City understand this, but we need our contribution to be more widely appreciated, especially in political circles. We hope this comprehensive study will help us in that objective.
Geoff Cook is chief executive of Jersey Finance. The full report is availably at www.jerseyfinance.je/valuetobritain