A good deal for the UK will be a good deal for the Channel Islands

The prospect of Brexit and what it will mean for Guernsey was a key topic of discussion at the recent sell-out Annual Guernsey STEP Conference.

I attended with two other Moore Stephens’ directors; Julie Pagnier and Judy Wright were encouraged by the view of the speakers on some reasons to be positive about the Brexit negotiations.

The panel discussion "What does Brexit mean for Guernsey?" featured Mark Pattimore (Chair GAT), Dr Savvas Savouri (Chief Economist, Toscafund), Dominic Wheatley (Guernsey Finance) and Jo Reeve (States of Guernsey, Director of International Relations and Constitutional Affairs).

During the panel Mr Savouri said that "there is a symbiosis between the UK and Guernsey" and that “a good deal for the UK [on Brexit] is a good deal for the Channel Islands."

He was also the keynote speaker at the event, and drew interesting parallels between Brexit, and recent political events in the UK to the period in 1992 when the UK left the European ERM (Exchange Rate Mechanism) and everybody panicked when the pound weakened.
Mr Savouri pointed out that despite widespread concern, in the five years immediately following 1992:

- Inflation was low and stable
- GDP averaged 3%
- Employment, tourism, house prices and FTSE all lifted year on year
- and the weaker pound encouraged inward investment into the UK

Indeed if we compare these factors to the current climate we can see China investing huge amounts of money into the UK post the decision to leave the EU.

Mr Savouri also encouraged the audience to look at the way corporates will react as a more defining signifier of what Brexit will look like. While politicians are prepared to play hardball, influential, large EU corporates will demand a soft Brexit because of the large investments and revenues from the UK that they will not want to lose.
Indeed most large EU nations regularly run a trade surplus with the UK so trade with the UK is vital to their own economies. On the other hand he also asked the audience if there might be more opportunities in the British Commonwealth and China than the EU for the UK and would the removal of EU barriers allow the UK to quickly establish direct agreements with countries in those regions?

In short, the conference heard that while there is uncertainty in the short term there remain opportunities for the Channel Islands, in particular because they are seen as stable jurisdictions, which will become clearer as negotiations progress and the UK’s place in the world post-Brexit is resolved.