Report Suggests Jersey Finance Sector Shrinkage

by Jason Gorringe, Tax-News.com, London

29 September 2011

Jersey's 2010 economic report, published on September 27, 2011, shows that Jersey's economy, as measured by Gross Value Added (GVA), declined by some 5% in 2010.

The finance sector, which contributes over 40% of value added to the economy, declined severely in 2010 by 11% and has contracted in terms of the value of goods and services it provides by over a quarter in the last three years, according to the report.

Gross Value Added is a measure of the goods and services provided by an economy or specific sector, providing a gauge of economic vitality, and in the case of Jersey's report the level of business being received by the island's financial services industry.

The report shows that total GVA for the whole economy in 2010 was at the lowest recorded level in real terms since at least 1998.

The finance sector accounted for two-fifths (41%) of total GVA in 2010, and for slightly less than half (48%) of all economic activity excluding the rental of private households. In 2010, the GVA of the finance sector was surpassed by that of the combined non-finance sectors of the economy for the first time since at least 1998, the report says.

The report shows that:

• The strong growth in total GVA up to 2000, and that in 2006 and 2007, was driven by the growth in GVA of the Finance sector;
• The much lower rates of overall growth seen between 2001 and 2004 were a result of a decline in Finance sector GVA, balanced by some growth in the non-finance sectors of the economy;
• The more recent annual declines in total GVA, since 2007, have been driven by the performance of the Finance sector, which saw GVA fall by -11% in real terms in 2010 and by more than a quarter (-28%) over the last three years.

Since its 2008 peak, the GVA by the finance industry has declined from GBP1.808bn in 2008 to USD1.435bn in 2010.

Meanwhile, most of the non-finance sectors of the economy recorded nominal increases in GVA in 2010. Construction, other business activities (excluding rental income) and public administration recorded increases of more than GBP10m compared with 2009, whilst several other sectors recorded smaller increases, of between GBP1m and GBP5m. Agriculture saw a fall in GVA in 2010.

Recommended