GUERNSEY’S economy is robust despite the knock-on effect the credit crunch is having on individuals.
Credit Suisse Asset Management vice-chairman Robert Parker (pictured) said the island has a healthy economy thanks to the stringent regulation of the Guernsey Financial Service Commission, its tourist industry and its international tax competitiveness.
He said Guernsey would feel the effects in both positive and negative ways. ‘The positive effect on Guernsey is sterling has devalued by about 20% against the euro in the last six months. That clearly has a positive effect for the tourism industry because it is now a place to visit.
‘The financial services in Guernsey focus on wealth management, trust, financial planning and private banking and therefore problems in the banking industry in the USA don’t touch Guernsey because the area of success and growth in finance is wealth management, trust, financial planning and private banking.
‘What is happening to the global economy is a limited recession in the USA and a slowdown in Europe and Japan with strength emerging in other markets such as China.’
Mr Parker said that as a result of the rising price of oil and food, agriculture would expand in response.
There are three key drivers for Guernsey’s economy.
‘One is the strength of the financial services industry and competition from other financial centres and Guernsey is doing well.
‘Financial regulation in Guernsey is very good and that is very important when it comes to brand image. Guernsey has had a scandal-free reputation.’
He said the island’s tourism industry was also strong. ‘Devaluation of sterling against the euro means that Guernsey is an attractive destination.’
He said hoteliers should concentrate on providing quality.
‘Thirdly something I call international tax competition, i.e. companies and individuals are moving increasingly to low tax centres like Guernsey.
‘I know there was a lot of controversy over zero-10, but it will be looked at as a strong contender by wealthy individuals and companies seeking to move to lower tax regimes.
‘The global credit crunch in what we would call the wholesale market is largely over. What I mean by that is banks have written off a staggering $345bn,’ he said.
‘The credit crunch has now moved on to what we would call the retail markets. The availability of credit from banks to individual borrowers is now reduced.’
He said activity in the inter-bank market had improved from the dire circumstances of the first three months of the year, but it was not back to normal yet.
Article posted on 23rd May, 2008 - 2.29pm
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