Reaction: keep calm and carry on!

Friday 24 June 2016

Jersey Finance Chief Executive Geoff Cook says the Island’s critical financial services sector must remain calm following the EU referendum decision which will lead the UK out of Europe.

Mr Cook said Jersey is renowned as a “stable” market place and as such must ride the current economic storm following the EU referendum vote.

He said: “Jersey’s role as a stable and well-established finance centre should give some much-needed reassurance to investors, their advisers and the asset management community in light of this outcome.

“Whilst financial markets are seeing a degree of volatility, history has shown that Jersey has dealt well with this in the past and will do so again.

“Fundamentally, Jersey’s constitutional relationship with the UK will not be affected by the UK’s decision to leave the EU and we remain convinced that the UK’s long-term position as a financial services powerhouse will continue.

“In addition, Jersey is already outside of the EU itself and maintains strong access to European markets through its broad and robust third country agreements. These also remain unaffected.

“Meanwhile, given the increasingly global outlook of Jersey’s finance industry, spanning Asia, the Middle East and Africa as well as Europe, it is in a strong position

“Jersey’s financial services businesses have always demonstrated real tenacity in the face of change, whilst Jersey’s government is on the front foot in representing its interests to the UK and Europe, which will continue to be major partners for Jersey and this should all give confidence to investors.”

Oliver Stones, Chartered Wealth Manager at Jersey’s Quilter Cheviot Investment Management, revealed the sense of shock throughout the financial sector.

He said: “From a Great Britain to ‘Little England and Wales.’

“Shocked, disappointed, surprised? ‘Thunderstruck’ best sums up my current state of mind. A brave new world beckons, but the sun will continue to rise on it despite the unknown political and economic repercussions of deciding to exit Europe. The systemic risks in other EU nations and the potential for a run on some of the weaker European banks are the likeliest early effects.

“Democracy, in its crudest form, has had its harsh ‘say’ and the UK nation has decided that it will take the serious risk of existing outside the European Union. That’s not to say the nation is not divided, nor that some clear demographics have not become clear in voting behaviour.

“There is no doubt for example that the vast majority of Euro-sceptics were the older generation who have ‘inflicted’ their view, rightly or wrongly, on the younger generation who will have to live with their decision over the next decades when the Euro-sceptics are long-gone. It might also be noted that the younger generation were very much more pro-Europe and less concerned about the immigration as the all-consuming issue.

“So what happens now? The Stock Market crashes, only it hasn’t, we are still above 6,000 at time of writing. There is a Sterling crisis, no there is not, well not ‘yet’ at least of time of writing, Sterling is at 1.39 versus the US dollar - and remember Sterling got to 1.15 in 1984 when we had the ERM crisis. There is just a sneaking suspicion that whilst the Brexit camp delivered a disaster-scenario if we stayed in the EU, the same can be said of the ‘Remain’ camp’s dire warnings of fire and brimstone if we left. Perhaps the markets are more rational and stoic than we give them credit. It’s not as bad as predicted for sure.

“The Prime Minister has resigned with a number of potential candidates lining up to take over. Don’t be fooled, this is no shoe-in for Boris. He didn’t exactly cover himself with glory in the messy Brexit campaign. But neither did George Osborne and David Cameron, who will be staying put until the party conference in October, so we have four months of jostling for power in the Tory ranks to look forward to over the summer. Perhaps Theresa May’s well-known Number 10 ambitions may be successful yet.

“The uncertainty has already reeked its damage on the UK economy so we can absolutely expect with clear certainty that UK GDP will suffer, that investment plans will be curbed and consumers in the UK will go into hiding, at least for the moment. It could be a case of the ‘means justify the end’ and that is clearly what the older generation have gambled on. We just dearly hope that their grey and balding heads got it right over this momentous decision and it bares testimony to their wisdom and experience over youth and inexperience.

“Jersey’s dependence on the finance industry is obviously a worry and of great concern but I think we do not need to panic. With good sense and rational thought, we will get through this stage of European political fragmentation. One thing is clear and is summed up in one of the most famous Churchillian quotes: “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”