Jersey facilitates the flow of vital investment into the EU which in turn stimulates economic investment and supports jobs and incomes.
The €200 billion of accumulated investment in the EU mediated through Jersey is helping support roughly 96,000 jobs across the continent, with €188 billion of this invested or settled by individuals or businesses resident outside the bloc. This foreign investment is supporting around 88,000 jobs.
Jersey also facilitates a flow of capital out of the European Union, and for the bloc as a whole excluding the UK, the net impact is a small outward flow. It could be argued that any outflow is a loss of jobs to these European economies.
Capital flows out of an area should not be viewed as negative. European investors may want to invest beyond the continent’s borders in order to diversify and reduce risks in their portfolios and to seek more profitable opportunities and higher returns. In this way, outflows reflect well-functioning and efficient capital markets which are better at matching investors with potential investments. And of course European Union countries benefit from these foreign investments as profits and interest are returned to the original investors.
Moreover, it should be no surprise that the EU, a mature and well developed economy, is the net investor into the rest of the world. This includes developing nations with greater appetite for capital.
The report estimates that Jersey catalyses tax revenues in the order of €1 billion a year based on net additional foreign investments into the EU or €1.9 billion based on gross foreign investment. If it includes total investment into the EU facilitated by Jersey these tax revenues could be in the order of €2 billion per annum.
On balance, given that no more than €0.1billion per annum of taxes are currently avoided or evaded and that tax generated by economic activity stimulated in member states (other than the UK) and facilitated by investment mediated through Jersey is in the order of €1.0 billion per annum, Jersey yields a net fiscal benefit to the EU governments of around €0.9 billion per annum.
Jersey's Value to Europe, Capital Economics - Report extracts