Nearly ten years since the beginning of the last global financial crisis, markets and investors once more face concerns about the stability of the global economy. But Guernsey remains a safe, stable jurisdiction, writes Guernsey Finance's Dominic Wheatley.
The vote of the British people in June 2016 to leave the European Union, followed by the surprise election of Donald Trump as President of the United States and, most recently, the failed power play by UK Prime Minister Theresa May in calling a snap General Election ahead of the start of Brexit negotiations, has left many looking for stability and certainty in financial markets, particularly in the structuring and safeguarding of their own private wealth.
During these turbulent times, Guernsey is priding itself on providing an environment of safety and stability, particularly in the area of financial services. But how?
Stability as standard
Central to Guernsey’s stability is its constitutional position. Guernsey is a British Crown Dependency and has been since 1204. Although proud of its British associations, Guernsey is not part of the United Kingdom (nor the European Union, for that matter). The island is instead autonomous with its own independent administrative, legal and fiscal systems and the island’s parliament legislates for itself.
Guernsey is also unusual amongst the Crown Dependencies and British Overseas Territories in being without political parties. Party politics has its pros and cons but can mean sudden changes in government policy. Guernsey’s non-partisan parliament has ensured consistency in matters of taxation and business law.
These were themes identified by Guernsey’s Chief Minister, Deputy Gavin St Pier, when he addressed a London audience at this year’s Guernsey Funds Forum. Deputy St Pier emphasised the fact that as a self-governing jurisdiction with its own parliament, Guernsey was not faced with going through the same protracted Brexit negotiations that the United Kingdom is currently presented with.
Having never been part of the United Kingdom or the European Union, the fundamental principles of our established relationship with both will not change because of Brexit, including our access to the EU. The Guernsey Government and the island’s finance industry have already done the hard yards in terms of negotiating and gaining non-EU ‘third country’ status – a status which gives Guernsey business access to EU Member States.
For example, by utilising national private placement regimes over the past year we have continued to see Guernsey-domiciled funds fundraising in EU Member States, including the likes of the Netherlands, Germany, Sweden, Denmark, Ireland and Luxembourg. Indeed, Guernsey funds now channel more than £50 billion into Europe from global investors across all asset classes.
Where the City of London and the UK are about to tread as a ‘third country’ we have been walking for many years.
In his speech, Deputy St Pier added that Guernsey had already been sharing its experiences at a government and regulatory level with its counterparts in Westminster and Whitehall, and that the island’s relationship with the UK and the City remained of paramount importance.
“Guernsey’s finance sector sees itself very much as the City’s ‘offshore’. We are not your competition. We are your teammates in what is likely to be a marathon,” Deputy St Pier told the audience.
Brexit will of course dominate headlines over the coming months and years, but Guernsey will continue to be able to meet expectations in terms of its service delivery for clients. Through meeting international standards and applying an effective regulatory regime, coupled with its respected status as a non-EU third country, Guernsey has carved out a place for itself in the mainstream of international finance.
Guernsey was an early adopter of the Common Reporting Standard and one of only four smaller jurisdictions to be invited to sign the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting alongside 66 other countries in June. Our comprehensive and verified (but not public) Register of Beneficial Ownership has also been fully implemented since August.
These measures continue our long-held commitment to tax transparency and the legitimate confidentiality of personal financial affairs. In doing so, Guernsey is in the privileged position of being able to provide stability for businesses and individuals amidst the uncertainty that pervades much of the global financial markets.
An original version of this article was first published in the STEP Journal, August 2017.