The Channel Islands’ credit rating improves, Gibraltar passes the EU Withdrawal Bill and Flybe’s rescue welcomed on the Isle of Man

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Last month in the UK, the ONS published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product. UK GDP per head was £31,976. In terms of extremes, GDP per head was £395,309 in Camden and the City of London and £15,034 in Ards and North Down in Northern Ireland. In comparison, Jersey GDP per head is £43,000, Guernsey £53,000, Isle of Man £57,000 and Gibraltar £70,000.

Channel Islands

Jersey’s Retail Prices Index (RPI), which measures inflation on the island, increased by 2.5% during the 12 months to December 2019; the lowest rate since June 2017 and down on the 2.7% in the previous quarter. Key drivers were tobacco, up 6%, plus alcoholic drinks and leisure services increased by 4.2%. Travel fares fell by 3.5% and household goods by 1.1%.

Inflation in Guernsey is measured by the Retail Price Index (RPIX), which excludes mortgage repayments. The island’s inflation rate was 2.4% to December 2019, up by 0.4% on the previous quarter. A 9.3% fall in travel fares did not offset a 5% increase in the cost of fuel or a 4.9% increase in the cost of alcohol, plus a 3.4% rise in tobacco prices amongst others.

New figures show Guernsey’s population reached 62,792 at the end of March 2019, the increase of 459 people was the biggest in 8 years. The most recent electronic census showed the employment rate had hardly moved with a decrease of 0.03% at the end of September 2019. Women were recorded as earning £30,578 on average, compared to £37,124 for men.

The Channel Islands’ credit rating has improved from negative to stable following Boris Johnson’s emphatic election victory. Credit rating agency Standard and Poor’s improved its outlook for Jersey and Guernsey, citing greater stability in UK politics and clarity over Brexit.

On transport, the UK government’s recue of Flybe avoided unwelcome disruption to the Island’s connectivity although Flybe did confirm Guernsey will be losing its air link to Heathrow from April. Last year, Guernsey paid Flybe a subsidy of £28 per passenger to keep the route running from March to October.

Also, Channel Islands-based airline Blue Islands has cancelled its routes from Guernsey to London Southend and Liverpool which began in May. Blue Islands blamed the deregulation of Guernsey’s airspace which means airlines do not need an air transport licence to fly to and from the island.

Guernsey’s new open skies policy is now similar to that in Jersey, where the number of passengers travelling through Jersey Airport reached 1.7m in 2019, the most since 1995. Numbers have increased by c275,000 in six years. Interisland services between Jersey, Guernsey and Alderney also saw a 17% rise in passenger numbers in 2019, the extra 15,000 passengers took the total to 105,328.

Gibraltar

Uniquely Gibraltar was the only British Overseas Territory in the European Union, consequently The Rock’s government passed the European Union Withdrawal Bill for Gibraltar, after the UK bill was approved by a large majority by Boris Johnson’s new government.

The law provides the mechanism to implement in Gibraltar the withdrawal agreement reached by the UK and the EU and covers the implementation period, citizens’ rights, and the retention and adaptation of EU law.

Following an initial delay caused by the formation of the new Spanish government, meetings in Madrid took place between the governments of Gibraltar, the UK and Spain to discuss the implementation of the Memorandums of Understanding (MoUs) which deal with the withdrawal.

The MoUs will apply throughout the Brexit implementation period from the start of February to the end of December, and that during this period, EU law will continue to apply to Gibraltar.

Gibraltar’s Legislative Reform Programme contained in the new Financial Services Act has come into force. The joint initiative between the Government and the Financial Services Regulator includes changes to enforcement, the engagement of inspectors, and restrictions on publication.

The new Act also gives the Minister for Commerce greater powers over the Financial Services Commission executive, including the power to remove its CEO, and sees the creation of an independent Decision Making Committee for disputes. It also aligns Gibraltar with UK regulators.

The reform follow a lawsuit against the FSC, it’s former CEO, and Director of Legal, Enforcement & Policy in 2018, relating to comments made in a press release issued on the Commission’s website, the day after Enterprise Insurance went into provisional liquidation.

IOM

Citing connectivity as the key reason why the UK government has kept Flybe airborne, nowhere is this more keenly felt than on the IOM, where the airline has a contract to transfer NHS patients from the island to medical facilities in Liverpool when specialist treatment is needed.

Last autumn Flybe announced plans to fly between the Island and London Southend for the first time in 2020. The airline also confirmed plans to end its service to London Stansted, less than a year since it was launched. In September the company announced it would shut down its Isle of Man base by this summer.

On development, work on a 55,000 sqm temporary silt lagoon to hold c44,000 tonnes of material from Peel Marina, including cadmium and lead, has started. The c£1m project will be undertaken in two phases.

The government has announced a plan to produce 75% of the island’s electricity from renewable sources by 2035 with most power likely to come from on and offshore wind turbines, although options for tidal and solar power energy generation will also be explored.

The plan includes a ban on all peat cutting, repairing up to 1,000 acres of peatland and the planting of an 85,000-tree woodland. At least £10m will be earmarked for the first phase in the 2020-21 budget with an estimated £25m of investment by the government each year matched by funding from the private sector. The Isle of Man’s should achieve net zero carbon emissions by 2050.

With the UK’s interventions in airlines and railways topical, the Public Accounts Committee’s enquiry into the Isle of Man’s taxpayers’ foray into the film industry rumbles on. The Isle of Man government put £60m into the film industry via the island’s Media Development Fund between 2007 and 2016; £32m has so far been returned from the investments.  This month treasury minister Alfred Cannan has rebutted accusations that the Manx government made mistakes when investing, stating that there was adequate due diligence.

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