AS THE grim realisation sinks in that the island’s economy has suffered a savage blow at the hands of the UK Treasury it is clear that the loss of the fulfilment sector is more of a probability than a possibility.

The Swiss Post spokesman could not contain his rather smug glee last week at the prospect of companies jumping ship in search of the competitive advantage that comes with VAT avoidance.

Quite why he is so confident that the UK will not seek to shut down the Swiss fulfilment trade in similarly brutal fashion is not clear. However, by that time it will be a bitter victory for the Channel Islands as the damage here will already have been done.

Of course, there is hope that a legal challenge to the Treasury decision may be successful. On the face of it the islands are being singled out for unfair treatment while other jurisdictions outside the EU are unaffected. It is blatant discrimination.

However, confidence in the justice of that case should be mitigated by the central premise that the UK has decided to stamp out the VAT-relief trade from the Channel Islands. It may be window dressing to appease the under-pressure high street retail sector but if the UK government is determined to end it there are many measures which can be used.

A successful LVCR industry relies, for example, on a partnership with the Royal Mail. If the government is actively hostile to the trade it is hard to see its postal service keeping prices down and delivering on time.

The lesson to be learned here is that once a decision has been made it is hard to get it reversed. Hundreds of jobs and millions in tax revenue are likely to go as a result.

The time to prevent the move was many months ago when the trade built up to a level that the government found impossible to ignore.

It is a lesson to which the finance industry must pay attention if it is to avoid a similarly arbitrary decision. The island has wisely embraced the quality end of the market in recent years and steered clear of areas likely to offend. It must continue to do so as hostility to our main industry would make the loss of the fulfilment sector seem a drop in the ocean.