RECENT turbulence in the markets has certainly been interesting, and to an extent worrying, to watch for the last month or so, with Northern Rock’s problems in particular focus. Undoubtedly confidence in the UK system has suffered, with even the Bank of England taking some of the flak for the trouble that has hit the markets. That is a blow to us all because we do, to a large extent, survive on confidence and when that is thrown into doubt, investors take fright and run for cover – or at least the safest haven.

It will be interesting to see how the market turmoil translates itself into the Guernsey figures for this quarter as some business has undoubtedly fallen away, in particular with some funds that were due to launch postponing the date until investor confidence returns fully. Yet other business has remained buoyant and some funds have even continued to market despite the hiccup.

We can take some comfort in Guernsey that we have a broad spread of financial services business that can withstand temporary issues such as this and indeed see it as an opportunity – which some have no doubt done.

Speaking to the London lawyers, who are still the major introducers of business to the island, they still have a long pipeline of business that will flow through to us and although that flow currently might have reduced, the tap will turn back on.

And we certainly need the tap to turn for 2008 because the finance industry will have to work hard to make up a large part of the deficit resulting from the tax initiative. We are committed to that, but need favourable conditions for it to be successful.

What will help us enormously is the proactive stance on legislation taken by the States, which will see a new trust law enacted next year together with a new companies law. In addition, we anticipate a new company registry opening for business in 2008 as well as further additions to the intellectual property suite of legislation, which is already proving a huge success in income terms. If the new registry follows suit, then the overall menu for success really starts to come together.

The one missing ingredient to all that is, yes, my usual ‘hobby horse’ – human resources.

But even here I sense a desire for more understanding and realism coming into that debate and with a better dialogue started between the industry and the Housing Department, the closer working relationship that that will bring has to be a force for good. I applaud both sides for taking forward a constructive debate on this vital issue.

Next year will be upon us before we know it but, within the constraints of international influences on us, the finance industry in Guernsey is in good heart and ready for the challenge that the new year will bring.