The new Capital Economics report comes as the relationship between the UK and other major developed economies and offshore and low-tax financial centres – such as the Channel Islands, the Isle of Man and the Cayman Islands – is once again being scrutinised, as the subject of tax avoidance by individuals and corporations dominates headlines and government agendas.
The report was commissioned by Jersey Finance, which represents Jersey’s financial services industry, and largely supports the organisation’s long-standing view that Jersey is a significant asset to the British economy rather than diverting business from it.
Explains Jersey Finance chief executive Geoff Cook, in an introduction to the report: "We believed that Jersey is a benefit to the United Kingdom, but did not have the data to demonstrate it. For the first time, this report provides the evidence base, confirming that Jersey is an overwhelming benefit to the UK."
Later, he adds: "It cannot be reiterated enough that Jersey has no interest in fostering abusive tax practices or money laundering."
Key findings in the report, which is entitled Jersey’s Value to Britain, include:
- The almost £500bn of foreign investment into the UK that Jersey that Jersey serves as a conduit for – (defined by the researchers as the value of the stock of assets in the UK owned by foreigners that had been in some way mediated by Jersey, as at end 2011) – “comprises almost 5% of the entire stock of foreign-owned assets” there
- £1 in every £20 of money invested by foreign individuals and companies in assets located in Britain reaches the UK via Jersey
- Each year, Jersey banks send around £120bn of their deposits to parent operations in the UK, which represents “1.5% of the funding of the whole UK banking system”
- UK net tax receipts generated by the activities of Jersey total around £2.3bn a year
- Two-fifths of all assets administered or managed across Jersey’s financial and wealth management sectors come from markets outside the UK and EU
- Jersey’s practitioners assert that four-fifths of the wealth they manage would be lost to the sterling zone in the absence of Jersey – together with Guernsey and the Isle of Man
Capital Economics is an economic research consultancy founded by Roger Bootle, a former HSBC chief economist, who is also a columnist for the Daily Telegraph.
Click here to download a copy of the 90-page report. To read and download a 20-page summary version of the report, click here.
