The State of Britain

Gibraltar growth drops slightly to a still aspirational 5.9% and greater financial transparency in the UK dependencies begins to have an effect

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Growth on the Rock dropped by 0.1% to 5.9% in the year to March 2019, the second highest growth rate in the UK and its dependencies. At 2.7% and 0.7% London and Northern Ireland have the highest and lowest growth rates in the UK with the Isle of Man’s latest figures showing 7.4%. The UK growth rate for the same period was 1.5%.

Unemployment in Gibraltar is negligible with 37 Rock inhabitants looking for work. At 2.7% and 5.7% the SW of England and the North East had the lowest and highest unemployment rate in the UK respectively. The UK unemployment rate stands at 3.8%.

Average earnings in Gibraltar have increased from c£569 to £586per week. In the UK average earnings are £623 per week. Gibraltar’s average property price is c£620,000.

With the Rock suffering from the scaling back of online gambling due to Brexit, the Chief Minister said in his budget address that the economy faced challenges, however, GDP per capita of $111,505 still placed Gibraltar third globally. The recent relocation to Malta of much of bet365’s Gibraltar operation highlighted the headwinds facing the economy given that gaming jobs had increased from 1,900 in 2008 to 3,800 in 2018.

The Overseas Territory’s Budget surplus was c£85m with net public debt at £314m or 13.38% of GDP. Opposition politicians claim that structuring major capital projects through government-owned companies gives an unclear view of Gibraltar’s public finances and that if these projects were included then debt is £1.2bn.

Channel Islands

Unemployment in the Channel Islands is low, sub c2% with c1100 islanders looking for work. At 2.7% and 5.7% the SW of England and the North East respectively had the lowest and highest unemployment rate in the UK. The UK unemployment rate stands at 3.8%. The Channel Islands’ average property price is c£480,000.

Net migration into Jersey has been estimated at 1,100 in 2018, an increase of 1%, which compares with 0.4% in the UK. The island’s population has increased by 11,400 since 2008 to reach 106,800, of which 78% were immigrants.

With a view to greater transparency, company records in the Channel Islands will become publicly available by 2023. On that theme, more than £210m belonging to a former Nigerian dictator has been seized from a Jersey bank account. The money was derived through corruption during the presidency of Sani Abacha in the 1990s, according to Jersey’s Civil Asset Recovery Fund. A shell company called Doraville held the funds, which were frozen in 2014. The money will be split between Jersey, the United States and Nigeria.

A controversial new list of corporate tax havens compiled by The Tax Justice scored Jersey and Guernsey 98 out of a possible 100 based on 20 different criteria. The top three are the British Virgin Islands, Bermuda and the Cayman Islands, with Guernsey in 15th place and the Isle of Man in 17th. At 7th, Jersey was higher than Guernsey because of a larger volume of foreign direct investment. The new index is at odds with the European Union’s removal of the Channel Islands from their tax haven grey list in March.

Lloyds Bank has frozen 8,000 Jersey accounts because customers failed to respond to requests to prove their identity. The suspensions came after the imposition of tougher money laundering rules in Jersey.

On development, a Premier Inn hotel is being built in Guernsey. The budget chain has planning permission for a 100-bed hotel as part of a £35m development which includes office space, a restaurant, and a 384-space multi-storey car park. Guernsey’s total bed stock is about 5,000 while the average hotel has 70 beds.

Isle of Man

Unemployment in the Isle of Man remained 0.7% during May with 305 islanders looking for work. At 2.7% and 5.7% the SW of England and the North East had the lowest and highest unemployment rate in the UK respectively. The UK unemployment rate stands at 3.8%.

Company records in the Isle of Man will become publicly available. The beneficial ownership registers, which show the ultimate owner of a company, are currently only accessible by local authorities in the islands. The new plans would see the records made available to the EU, businesses, and the general public by 2023. From 2021 the UK dependencies plan to merge their registers with their EU equivalents with the governments of Guernsey, Jersey and the Isle of Man bringing forward legislation to make their registers publicly available by 2023. Given confidentiality is a benefit for some firms the move could be economically damaging.