Client Weekly Update – 17 February

Market update

European markets are lower today with shares in Germany off the most. The DAX is down 0.56% while France’s CAC 40 is off 0.35% and London’s FTSE 100 is lower by 0.25%.

The Dow Jones Industrial Average fell 74 points, or 0.22%. The S&P 500 and Nasdaq Composite dipped by 0.72% and 1.02%, respectively. Yields on the 10-year and 2-year U.S. treasury bond hit levels not seen since November, weighing on equities.

Asian markets finished broadly lower today with shares in Hong Kong leading the region. The Hang Seng is down 1.28% while China’s Shanghai Composite is off 0.77% and Japan’s Nikkei 225 is lower by 0.66%.

UK inflation falls but remains in double digits at 10.1%, official annual rate drops in January for third straight month, although households still under pressure

The UK’s annual inflation rate fell for a third consecutive month in January, easing pressure on the Bank of England to raise interest rates, but remained in double digits and near the highest levels for 40 years.

The Office for National Statistics (ONS) said annual inflation as measured by the consumer prices index fell to 10.1%, continuing a decline from 10.5% in December and its recent peak of 11.1% in October. City economists had forecast a modest drop to 10.3%.

The fall was driven by a continued drop in petrol and diesel prices for motorists at the start of the year, as well as the price of air and coach travel falling back after a steep rise in December.

Restaurant, cafe and takeaway prices also fell month on month, while the cost of furniture dropped as retailers put on January sales.

The latest figures come as the central bank considers whether further interest rate increases are warranted to tackle inflation, a move that would add to pressure on borrowers after 10 successive rate rises in the past 18 months.

UK inflation remains higher than in the US or the 20 EU countries in the eurozone, and some forecasters have said the UK’s acute worker shortages and other constraints on the economy such as Brexit could add to inflationary pressure. US inflation fell to 6.4% in January and is estimated at 8.5% in the Eurozone.

Price of family home drops, according to new housing figures

The volume of property sales has fallen for all types of accommodation except one-bedroom flats, according to new figures published today.

Prices in the last quarter of 2022 suggest that the Island may be experiencing the slowing in the market that some predicted last year, with the price of two-bedroom flats and three-bedroom houses lower than the previous quarter.

The latest housing report also showed that the average cost of a home in the Island was £691,000, higher than the £623,000 recorded in the same quarter in 2021 – but lower than the record high of £709,000 recorded in the third quarter of 2022.

Between October and December the price of two-bedroom flats and three-bedroom houses fell, while the cost of two-bedroom houses was largely unchanged. Only one-bedroom flats and four-bedroom houses saw an increase in their average price compared to the previous quarter, reaching their highest mean prices to date.

The index – which measures the combined average price of one and two-bedroom flats together with two, three and four-bedroom houses – appears to confirm a slowing in the market. Recorded in the third quarter of 2022 saw a decrease in turnover following the first three quarters when turnover was almost identical to 2021.

It fell by 40% compared with the same quarter the previous year, and by 27% compared with the previous quarter.

Pension consultation deadline nears

Islanders have ten days left to provide feedback on proposed changes to the Financial Services Ombudsman’s powers over pension-related complaints.

A consultation is under way as part of the government’s attempt to strengthen protection for consumers’ rights by developing a new legislative and regulatory framework for Jersey’s pension market.

It is hoped the proposed changes – which include bringing complaints about any Jersey occupational pension scheme into the scope of the Ombudsman – would improve the service provided to consumers regarding their arrangements.

Assistant Chief Minister Elaine Millar said: “Giving consumers access to a free and independent complaints resolution authority will ensure there are consistent standards of delivery across the market, ensure a better service for members, and enhance our Island’s reputation as an international finance sector.”

“As an island, we are proud of our pension industry and our public sector’s reputation for first-rate service delivery of members’ pension arrangements, and we are committed to ensuring this deserved reputation is maintained; the Office of the Financial Ombudsman will be key to delivering this.”

Islanders have until 23 February to submit their views on the proposals via the website.

Jersey minister brands ‘cancel culture’ accusation ‘utter nonsense’

The minister overseeing several large government projects which have been shelved or amended – including the new hospital and Fort Regent – has strongly rejected claims that decisions have been politically motivated.

Infrastructure Minister Tom Binet said the idea that the government had adopted a ‘cancel culture’ in dropping schemes started by the past Council of Ministers was ‘utter nonsense’.

The phrase was used by Deputy Lyndon Farnham, the most senior member of the past administration still in the Assembly, to describe the new government. Yesterday, the JEP reported on ministers’ recently published ‘Delivery Plans’ and highlighted several key projects that were ‘on hold’ with no delivery date.

These included a new combined ambulance and fire headquarters and sports facilities at Le Rocquier School. Deputy Binet conceded that ‘on hold’ was not the best phrase to use and ‘work in progress’ would have been more accurate. “Let’s take the hospital, for example,” he said.

“It’s not really a cancellation; it’s an alternative approach, for reasons that we explained several months ago, including changed circumstances and affordability, given the completely new global climate.”

“And with the Fort, the previous government’s Future Fort plans was a feasibility study that was costed out when borrowing was at 2% and inflation was low. It indicated that without a casino, it was going to lose money, and with a casino, it possibly could break even with a fair wind.”

You’ve only got to apply the new circumstances to that scenario. It was a feasibility study; not a project that anybody had passed or promised.

“So, we’ve not cancelled anything; we’re just not proceeding with an idea.” Deputy Binet added: “I would suggest that this whole concept of ‘cancel culture’ comes from a frustrated politician, whom I like very much but who hasn’t got a great deal to do.”

“If there’s any political motivation in this, it’s coming from my friend Deputy Farnham. The whole business of relocating the fire and ambulance services isn’t on hold; it’s very active at the moment and right in the centre of our agenda.”

“It’s not within my gift to say more, as it has to come from the Future Places Ministerial Group, but we’re on the cusp of announcing some form of analysis because the blue-light relocation is the first domino that has to fall in order to free up space for a new three-form-entry primary school.”

“My criticism is not personal to any member of the new government; this is bringing forward a debate about its cancel culture. I simply cannot see how the government has had the time to seek and consider advice on these things. As an elected States Member, I am doing what I was elected to do.”

“I have many calls from people who are disappointed, concerned and confused about what is happening. These are serious issues that we are dealing with, including the building of a new hospital, where the future health of thousands of Islanders is at stake.”

Overseas Aid director becomes new Jersey Heritage chairman

Jersey overseas aid commission director Simon Boas has been confirmed as the new chairman of Jersey Heritage, succeeding Tim Brown, who stood down at the end of last year. Mr Boas, who has spent most of this career working in the third sector, said he was delighted to have been appointed to the role by the board of which he has been a member for three years.

“I love explaining to people the richness and depth of Jersey. Many have heard of our finance industry, and some our potatoes and cows, but all are astonished to learn of our unique history and culture, our language and legal system, and an archaeological inheritance which spans the wonders of still-living Neolithic sites to the sobering stone and concrete reminders of war and occupation. Jersey Heritage, like Jersey Overseas Aid, flies a flag for the Island internationally,” he said.

Initially a volunteer with Jersey Heritage when he moved to the Island with his wife, Aurelie, in 2016, Mr Boas said that his time on the organisation’s voluntary board had made him realise what a special organisation it was.

“I’ve worked in dozens of countries, but Jersey is unique; not just for the extraordinary richness of its heritage, but because so many people engage with it.”

“Our history is alive, from our world-famous palaeolithic sites to our forts and castles and bunkers, via our Battle of Flowers and honorary police and the Clameur de Haro. Over 17,000 Islanders are members of Jersey Heritage, because people understand how important our past is for our future,” he said.

In his day job with Jersey Overseas Aid, Mr Boas appointment coincides with the appointment of four new board members to serve on the independent trust which manages the Island’s public heritage resources and has service-level agreements with a number of government departments.

Jersey Coastguard issues warning of sea dangers after a busy year

Jersey Coastguard has warned of the dangers of being cut off by rising tides and issued fresh advice to boat owners, after the organisation recorded its busiest year for call-outs since 2016.

They advised boat owners and those who borrow boats from friends and relatives to check their equipment carefully before heading out to sea, with the organisation’s 2022 annual report showing an increase in search-and-rescues on the previous year.

And they have also warned of the dangers for those venturing out on foot at low tide, ahead of what is likely to be this year’s biggest spring tide next week, at nearly 12 metres. Mechanical failures at sea and people cut off by the rising tide accounted for 69 of the 206 search-and-rescue incidents last year, an increase of 14 on the total figure for 2021.

It made the year the busiest for the Coastguard since digital recording of incidents was introduced seven years ago. A spokesperson said:

“Every year, the lead occurrence is equipment failure. We advise boat owners or people who have commandeered boats from others to check carefully before they head out, especially when the weather is like it is at the moment and there can be issues with old fuel or other mechanical failures.”

Jersey Coastguard noted a rise in the number of people being cut off by the tide – both tourists and residents – from 15 the previous year. The 2021 figure followed a social-media campaign and the spokesperson confirmed that new campaigns and signage would be rolled out before this year’s summer season to try to enhance public safety around the coastline.

“It is likely, if the present weather continues, that people might venture out and the outcome for those who end up in the water at this time of year is not good,” they said, adding that the vast majority of casualties had no intention of going into the sea.

Commenting on the 2022 annual report, coastguard and vessel traffic service manager Dan Downey attributed the increase in incidents last year to the warm summer weather, which saw both Islanders and visitors encouraged to take to the sea and to beaches.

The safe recovery of two people on board a light aircraft which ditched into the sea in November was made possible by our local search-and-rescue community, as well as the working partnerships with neighbouring maritime rescue co-ordination centres.

Jersey is a member of the Anglo-French accidents technical group (AFATG), co-operates with the MANCHEPLAN, an Anglo-French maritime contingency plan for the English Channel, and is also a member of the UK Search and Rescue Committee.

Jersey Coastguard say these memberships enhance the Island’s close working relationship with colleagues in Guernsey, France and the UK, and enable participants to improve response procedures and learn about the latest technological advances in SAR equipment.

They added that the relationships also enabled Jersey to call on additional air and sea search capability, including lifeboats, planes, helicopters and offshore support vessels such as MV Freja and Deep Cygnus, both of which were deployed during the major incident in December involving L’Ecume II, which sank after colliding with Commodore Goodwill.

Punctuality of flights and baggage delivery at Jersey Airport improves

Jersey Airport saw improvements in punctuality of flights and baggage delivery during the final quarter of 2022, Ports of Jersey has said in its quality of service report for the three months ending 31 December.

With the exception of weather-related delays, the proportion of flights arriving within 15 minutes of the scheduled time was 74.6%, up from 66% in both the second and third quarters.

Meanwhile, 73.7% of departing flights left within 15 minutes of the stipulated time, up from 67% in Q2 and 64% in Q3.

The percentage of flights for which the final bag was delivered to the baggage carousel more than 20 minutes after a plane’s arrival was 18% during Q4, down from 26% between April and June and 27.9% the following quarter. The figure for a final bag’s delivery after a wait of 45 minutes or more was less than 0.005%.

Despite this, Islanders were hit by baggage-handling chaos at the end of the year, with one passenger left with only winter clothing in Sri Lankan heat after bags were left at the Airport on Boxing Day when workers were unable to load them onto a flight.

The chaos came after Swissport took over BA’s ground-handling operations from Island firm Airline Services in December. The report states that the figures “reflect the significant challenges of the ramp-up of operations as a result of the strong but peaky demand for travel.”

Improved airport figures, Ports of Jersey added, was a reflection of “the stabilisation of both demand and the associated airport operations”.

Meanwhile, Harbour data showed ‘consistently strong’ passenger numbers from the UK, but also the negative effect of Brexit on passengers from France. Ministers have pledged to seek a solution that would allow French nationals to come to Jersey without a passport.

More French goods on the way? Condor sees 30% rise in freight on southern link

Condor’s southern freight service has seen a 30% uplift in business since it was bolstered with additional sailings last year, the company’s chief executive has said.

John Napton made the comments just a few days after Economic Development Minister Kirsten Morel said the case for an expanded supply route from St Malo ‘remains strong’, despite French freight operator Nostos Marine being placed into receivership.

Condor’s French freight service has been running for 30 years, most recently with a one-day-a-week crossing operated by the Goodwill, which was last year bolstered by three weekly crossings on the high-speed Voyager.

Mr Napton said that the company was ‘naturally delighted’ that the extension of its established freight link to the continent had shown a 30% increase in less than a year.

“This is due to our frequency and extra capacity. Island-based and continental businesses are able to ship chilled and ambient items more often, and because Voyager is a larger vessel than her predecessor, offering greater deck space, this helps the range of products and materials that can be transported,” he added.

Mr Napton also said that Condor’s general freight operation had shown ‘resilience’ during the recent periods of bad weather and had helped to keep shelves stocked over Christmas.

However, during prolonged periods of extreme weather in the Channel, some supermarket shelves were left bare.

“I would like to pay tribute to the 100-strong freight team, to the crews on board our two ships and to our shore-side staff for their dedication, particularly in the key weeks before Christmas when we experienced some very challenging weather conditions, including battling five-metre waves in the English Channel,” he continued.

“Despite this, we managed to ensure everyone was stocked and supplied in the islands over the festive period, so I am grateful to our staff for their hard work and determination, and also to the local retailers and logistics partners with whom we work closely.”

Deputy Morel has previously spoken of the potential to increase freight capacity from France, arguing that it could help reduce the impact of ferry cancellations and keep supermarket shelves stocked.

It had been hoped that Nostos Marine’s 55-metre Norwegian-built vessel – Southern Liner – would also transport goods regularly to the Channel Islands, after the service was established at the start of 2022.

However, the company’s co-founder, Pierre Vennin recently confirmed the business had been placed into receivership, having operated only six trips between the French port and Jersey.