Want the economy to recover? Buy local!

Thursday 30 April 2020

Want the economy to recover? Buy local!

Thursday 30 April 2020

As Ministers prepare their roadmap for Jersey’s economic recovery after the virus crisis, it’s easy to get lost in the jargon - but, for one business guru, the answer is far more simple than all that.

With Jersey’s plans to scale back on 'stay at home' measures imminent, politicians and businesses alike are preoccupied with what life after lockdown means for the island.

In the latest in a series of articles asking major players in local business what they think recovery ought to look like, Express columnist Kevin Keen reckons there’s one simple solution which will be crucial in steadying the ship: invest in the local economy...

“For me, the sign of a real expert is someone who can take a complex topic and make it simple to understand.

Economists are generally not known for this skill, but I do recall one of the States consultants demonstrating that it is possible, even with economics. At a meeting some years ago, he cut right through all the jargon and said if we wanted economic growth what we needed to do was export more and import less!

Jersey aerial 850x500

Pictured: "If we wanted economic growth what we needed to do was export more and import less!"

This resonated with me because I was working at the dairy, a major producer of local food.

Sometime later at a 745 Breakfast Club meeting, I made the case for locally produced food rather than the imported variety - in this case, our fantastic Jersey Dairy yoghurts. I estimated that about 80% of the money spent on a Jersey Dairy yoghurt stayed in Jersey, whereas 80% of the value of the imported competition left the island. Indeed, it was one of the ideas behind the ‘Think Twice Buy Local’ campaign, which ran about 10 years ago.

In essence, if we spend money locally, we will have a better chance to benefit from that money again as it works its way round our economy. One man or woman’s yoghurt is another person’s wages, after all.

During the covid-19 crisis we have all been reminded just how joined up our community and economy really is, and how we can support each other. We have also learned that long complex supply chains are not as resilient as we thought they were.

Pictured: "One man or woman’s yoghurt is another person’s wages, after all."

Hopefully, as we come out of this, we won’t forget the importance of importing less, and of course, our export industries, financial services, tourism and agriculture.

The financial services industry does a great job of making sure we know just how much of they spend locally. In the latest Statistics Jersey report it is noted that in addition to the £890m of salaries, the industry spends £400m on local goods and services (about half of the total spend in this category) and, of course, there is the tax they pay.

Although the States of Jersey provides a very comprehensive annual report, I was unable to find any information about what they spend locally and their policy on local procurement. Apologies if I missed it, the report really is big – some 262 pages.

Procurement policies that support local purchasing and report on it annually would be a real step forwards as we try to rebuild our economy. Out of the £1.3bn of day-to-day spending we know salaries and most social benefits stay local but what about the rest? It would be great to know.

Pictured: The finance industry spent £400m locally in 2018. (Statistics Jersey)

This is not just about economics; local procurement can also build capacity and resilience and of course the service will be great. Local businesses depend on their reputation to keep local customers.

Of course, the States need to get the best value for the taxpayer, but I think a broader view of what best value actually means is required. It is not just about the price.

Clearly, we will always need to import most goods and many services but that does not mean we should not aim to buy local whenever we can. The States could set a great example by committing to that and reporting annually on how they are doing.

As consumers we should be doing the same, it will not only help our economy recover; it is the right thing to do. So please think twice and buy local if you can.”