Finance experts still unclear over Brexit's effects on Jersey's economy

Thursday 14 July 2016

A team of UK financial experts who advise Jersey on how to raise and spend money says it’s too early to assess the effects of Brexit on the Island’s economy.

Jersey’s Treasury Minister Senator Alan Maclean wrote to the Fiscal Policy Panel last month because the States is gearing up to debate the Medium Term Financial Plan – the Island’s financial blueprint for the next three years - and he wanted to check if the plan was still sound.

In a nine-page report the panel says “at this point, so soon after the referendum, the economic implications of Brexit for the Jersey economy are unclear. Before the results of the UK referendum were known, the Panel had found on their June fact-finding visit that the Jersey economy was performing more strongly that previously thought.”

In the light of this the panel’s advice is “to continue to implement the MTFP in line with previous FPP advice to offer support for the economy in the short term but aiming to return the current budget to balance by 2018/19.”

But the panel does go on to note: “as well as a re-negotiation of the UK’s relationship with the EU, there is a risk that Brexit will result in a change in Jersey’s terms of access to the EU. Whilst there are a number of reasons to be optimistic that such a change will not occur, it is clear that any re-negotiation of Jersey’s position would probably be detrimental to the long-run prospects for the Jersey economy.”

Finally the panel says if Brexit does cause the Island cash flow problems the States should draw on reserves rather than changing taxation of spending plans.

Senator Maclean issued a statement saying he "warmly welcomes the advice" and believes "this is an important juncture in UK politics, which is why I felt it necessary to commission an update report without delay. The Panel highlight that while there is significant economic uncertainty about the impact of the referendum result on the UK economy, the Jersey economy is not likely to be immune to any impacts. However, the Panel are clear that at this stage their advice has not changed and that we should still be looking to support the economy in the near term and balance our books in 2018/19.”