Brexit: opportunity not threat

Saturday 25 June 2016

Jersey’s Financial Services Commission says the uncertainty and turmoil surrounding the United Kingdom’s decision to leave the European Union may provide opportunities for the Island.

Because of the deal the UK signed on behalf of the Channel Islands when it joined the European Economic Community back in the 1970s, in terms of market access the EU treats Jersey as a third country. The Financial Services Commission says “whilst it seems possible that no medium term changes will be seen in this respect. There may also be opportunities for Jersey given the relative stability we now offer in the current climate.”

Markets tumbled following the referendum result. The FTSE began the day by falling more than 8%. It has since rallied, but is still 2.5% lower.

 Sterling has also suffered. At one stage it was standing at $1.3236 – a drop of more than 10% - its lowest since 1985.

The commission notes that “Brexit” is likely to have both short and long-term consequences for the Island’s financial services but that the Island’s ability to influence the market is limited.

“It should be noted that the JFSC does not have macro-economic management powers such as the setting of interest rates and the management of the sterling currency which are exercised in the Jersey context on our behalf by the Bank of England. The Governor of the Bank, Mark Carney, has already said this morning that it has substantial contingency plans in the event of a proposed UK exit from the EU to achieve continuing market stability and confidence in those markets that are of importance to Jersey and we are significantly dependent on a successful outcome for these plans being delivered by the Bank.”

The Commission believes the Island is in a strong economic position and has the ability to weather the current period of uncertainty. It goes on to say “in general, we do not see the likelihood of significant changes in the short term nor see the period of market volatility we are currently entering as threatening the financial stability of Jersey firms."