The People of the UK Have Spoken!

A remarkable feature of recent elections around the world, including today’s UK result, is that the pollsters by and large have got it wrong.

Prime Minister May is likely to be regretting her reliance on a 20 point lead in the opinion polls, undoubtedly a big swing factor in her decision to call an early general election.

Early this afternoon (Friday 9 June), Theresa May had an audience with the Queen at which she confirmed that she had the confidence of the House, could form a government, and would therefore be able to continue to be Prime Minister.

No one who was party to that conversation would admit it, but it was unlikely to have been a cosy chat: the Queen, by all accounts, does not simply accept platitudes from her ministers but instead asks searching questions and demands genuine explanations.

She would have had a lot to discuss with Mrs May. The Prime Minister has gone from leading a party with an overall majority (albeit a small one) to being reliant on the DUP to get any proposal through the House. The subject of Brexit negotiations, which start in ten days, may also have come up.

The Prime Minister’s gamble in calling the general election has not paid off; it has not delivered the larger majority which would have enabled her to go into the Brexit negotiations with greater confidence, although it has reduced the pressure that negotiators will feel by extending the time that they have to reach an agreement with Europe before parliament has to be dissolved.

One thing that has struck me in this election is that conversation has been the key to engaging the electorate. Whatever your political point of view it has to be conceded that a clear articulation of policy intent has held public attention more effectively than slogans or personality based campaigning.

The young in particular have gone for the candidates who engaged them in conversation, and who have been willing to discuss a wider range of issues other than Brexit. I wonder whether this will manifest itself in a change in the tone of government – perhaps more conversational, more consensual, more conciliatory.

When the Brexit negotiations begin on 19 June, we know that Michel Barnier will be sat as chief negotiator on the European Union side of the table. The 65-year-old Frenchman’s team have already set out clearly what their position is and the strategy they plan to take.

And on the UK’s side? The UK negotiators have stated their high level aims but are yet to spell out the detail, and – with the DUP having to be considered in any plans – Brexit may now mean a softer Brexit than was originally thought. It seems likely for example that Customs Union with more open borders will be a key requirement given the current Irish arrangements.

Despite the intense media attention and all the speculation, the reality is that, if they create a solid Conservative / DUP alliance, not much will change in Westminster as they will have the majority needed to pass legislation. Combine this with results north of the border –where the SNP’s calls for another independence referendum have been severely weakened – and the future of the United Kingdom looks stronger than it did before the election.

What does this all mean for Jersey, and for the finance industry?

If 2016 taught the international financial services community anything, it is that reputation is everything. That is why Jersey has sought to differentiate itself from other jurisdictions by asserting its role as a responsible safe harbour and through demonstrating its commitment to the highest international standards of regulation and cooperation.

Safe and reliable may not be exciting characteristics, but in an uncertain world they are highly prized by international investors against the backdrop of what has globally already been a turbulent year. Internationally, Jersey is continuing to thrive by highlighting the certain and familiar environment that is offered in a world of flux, whilst at the same time drawing on its key strengths as an innovative international finance centre which meets international standards.

And of course maintaining this reputation for stability and certainty is crucial for our own ongoing success. On Tuesday Jersey was one of a select number the states to sign the base erosion and profit shifting (BEPS) multilateral convention at the OECD headquarters in Paris.

BEPS helps governments to prevent tax planning strategies that artificially shift profits and minimise tax liabilities and the convention ensures that existing bilateral tax agreements become BEPS-compliant, allowing Jersey to strengthen its tax treaty network more effectively and providing certainty in Jersey’s position as an international finance centre of substance and excellence.

And what about Brexit? Jersey’s constitutional relationship with the UK remains unchanged, and we retain our ‘third-country’ access into EU Member States for financial services thanks to existing directly negotiated agreements.

So over the next few days – and potentially longer – the UK’s political leadership faces a challenging period during which there may be uncertainty. We will monitor it, of course, but we know that Jersey’s position as an IFC is secure.

The great British public have confounded the ‘experts’ again, and however the political scene unfolds we stand ready to partner the UK government in developing international business, in creating jobs and growth, and in supplying the essential investment needed to support the aspirations of the British people.

Download PDF Copy Article HTML to Clipboard