Client Weekly Update – 13 January

Surprise growth suggests that Uk may avoid recession for now

Figures released today confirm that the UK’s gross domestic product (GDP) – a key economic measure of services, construction and manufacturing output – rose by 0.1%. The Office for National Statistics (ONS) said pubs and restaurants contributed to growth as people went out to watch the football. However, growth slowed sharply from October, partly due to strike action. Rail workers and Royal Mail staff staged walkouts over pay and working conditions in November. Darren Morgan, director of economic statistics at the ONS, told the BBC’s Today programme: “We definitely saw the impact of industrial action in today’s figures. “We saw reasonably large falls in rail transport, postal work and warehousing and this sector had the biggest drag on the economy in November.”

There was continued industrial action in December, which widened to include NHS workers as well as Border Force staff at six UK airports. Despite the boost to economic growth in November, it is not clear if the UK will avoid a recession this year. The 0.5% rise recorded in October was largely as a result of a bounceback from businesses shuttering to mark Queen Elizabeth II’s funeral in September.

A recession is defined as two three-month periods, or quarters, of shrinking economic output in a row. When a country is in recession, it is a sign that its economy is doing badly. During a downturn, companies typically make less money and the number of people unemployed rises. Graduates and school leavers also find it harder to get their first job. Between July and September, UK economic output shrank by 0.3%.Although there might have been a brief improvement in November, the Federation of Small Businesses (FSB) warned that concerns over the economy haven’t yet been laid to rest.

The UK is continuing to battle the pace of price rises, or inflation, which is at a 40-year high largely due to soaring energy bills. The Bank of England has announced a number of interest rate rises since December 2021 to cool consumer demand and combat soaring costs.

US prices drop for first time since May 2020 as inflation rate falls to 6.5%

News from the US also confirmed that prices dropped in December for the first time since May 2020, in an encouraging sign that the inflation crisis may be easing. According to the latest consumer price index (CPI) – which measures a broad range of goods and services – the cost of living dropped 0.1% in December compared with a rise of 0.1% in November. The annual rate of inflation fell to 6.5% from 7.1% in the previous month, the sixth straight month of yearly declines, according to the Bureau of Labour Statistics.

Falling gas prices were by far the largest contributor to the monthly decrease, falling 9.4% over the month, more than offsetting increases in shelter indexes, which rose 0.8% over the month and were 7.5% higher than a year ago. The news cheered European investors and helped the FTSE 100 index rise to a four-year high in London but was met with a more muted response on Wall Street, with most of the major indices making small gains. In a research note Oxford Economics said the latest CPI survey was “another small step in the right direction” but said it was unlikely to deter to the Federal Reserve from continuing raising rates as it fights inflation.

Donations from Jersey’s super rich ‘vital’, says charity

A charity has praised the philanthropic efforts of high-net-worth individuals and urged the government to recognise the ‘vital’ donations they make when considering any tougher restrictions on super-wealthy immigrants. Family First – which offers financial, administrative and emotional support to families needing to travel to the UK for medical treatment – said that it was ‘deeply concerned with the current tone from government’ regarding high-net-worth individuals, as the backing they have given the organisation has been ‘critical’ to its survival.

The charity, founded in 2018 by the Grace Crocker Family Support Foundation, the Jersey Community Partnership and LV Pharmacy, said that demand for financial support for families with a child requiring UK medical or mental-health treatment had soared over the past 18 months. Aidan McAvinue, Family First chairman, said that while the charity welcomed the increased engagement it had seen from the new government since the election in June, it was important that politicians recognised the philanthropic efforts of many of the wealthy immigrants. So far, the charity has helped 164 families and the goal is to ensure that no family, regardless of circumstances, is faced with lack of information, support or financial barriers limiting their ability to spend time with family in the event of urgent medical events.

Mr McAvinue said: ‘Feedback from government agencies, healthcare professionals and families affected by these stressful events, is that the service is critical, particularly during Covid when we experienced a 200% increase in demand for our support. Family First was initially funded by the Grace Crocker Family Support Foundation and the Jersey Round Island Challenge and has since attracted long-term support from high-net-worth individuals and philanthropic foundations in the Island, delivering over £370,000 to families needing financial, travel and expense support related to urgent or ongoing medical emergencies. The charity has also recently benefited from the support of the Co-operative Society’s donation of facilities and furniture for visiting families.

Under the new Government Plan, which was approved by the States Assembly last month, the rate of tax that wealthy immigrants must pay has increased to £170,000 with income exceeding £850,000 being taxed at 1%. Ministers are also reviewing the existing high-value resident scheme with a view to refreshing it for new entrants to the Island. However, a move to block high-net-worth individuals from coming to the Island for at least a year was rejected by the Assembly. Mr McAvinue added: ‘Critically, we are deeply concerned with the current tone from government regarding high-net-worth individuals and wealth institutions in the Island, many of whom have been critical to our survival.

Minister ‘to encourage’ further European air links after launch of easyJet Amsterdam route

The Economic Development Minister is to push for new direct air routes between the Island and Europe. Deputy Kirsten Morel said he believed that links to Paris, Berlin, Madrid, Lisbon and other major cities could be commercially viable, after easyJet confirmed it had received a positive response to its new service from Jersey to Amsterdam. Tickets for the new route – the airline’s first international service from the Island – went on sale last month.

At the time it was announced, Deputy Morel said the trial route to the Netherlands’ capital could lead to flights to other parts of Europe if it proved successful. Although the company would not provide specific details on bookings, easyJet said it was pleased with initial demand – and that it would be continually reviewing its network ‘to identify opportunities’. ‘It is really encouraging that sales are strong,’ said Deputy Morel. ‘I will be engaging with Ports to encourage them to further the expansion of our European networks. ‘I think that it will be an incremental [process]. I don’t think that we will see lots of places come online all at once.’

An easyJet spokesperson said: ‘While we don’t currently have plans to operate more routes from Jersey, we continue to be able to serve our customers in the region with routes to London Gatwick, London Luton, Manchester, Liverpool and Glasgow, as well as summer routes to Edinburgh and Belfast. ‘We continually keep our network under review to identify opportunities to offer more choice for our customers.’ Following a visit to Rennes Airport last year, Deputy Morel said he had spoken to officials from the region who were ‘certainly’ interested in a year-round service to and from the Island.

Banning plastic cutlery ‘the next logical step’ for Jersey

Banning single-use plastic cutlery and plates is ‘the next logical step’ for Jersey, the politician who campaigned successfully for recent legislation covering plastic bags has said. As UK media reports indicate that England is on the verge of following Scotland and Wales in banning a range of plastic items, Deputy Inna Gardiner said she welcomed the move, which would affect any restaurants, supermarkets, cafés, kiosks and takeaways offering these utensils to customers.

Deputy Gardiner said: ‘It’s always been clear to me that banning single-use plastic bags was the first step and a ban of single-use cutlery and plates is the next logical step for Jersey. Reuse and recycle is the way forward.’ She cautioned that it had taken almost two and a half years for legislation banning single-use plastic bags and imposing a minimum charge for reusable bags to be implemented, which happened last July. But Deputy Gardiner said that the two-year timeframe had included some important steps, adding: ‘The consultation, publicity and preparation for the ban was extremely important for all stakeholders. ‘I am still unclear what the UK timescale to enact the ban will be and whether such a long consultation period will be possible for us but I would welcome the introduction of a ban on single-use cutlery and plates at the same time in Jersey as in the UK.’

Infrastructure Minister Tom Binet, who has responsibility for the Single Use Plastics Law, said he was pleased by the way traders and customers had adjusted to the new legislation, adding that he believed the ‘bring your own bag’ culture was starting to become embedded in Islanders’ shopping habits. He said: ‘The way we designed the law allows for further types of plastic to be banned in future, but we want to first see how this initial step settles in before looking to expand it further. ‘Our Trading Standards team will watch with interest to see how the restrictions on plastic cutlery, plates and polystyrene trays are implemented in England.’

Nigel Jones, chair of environmental group Jersey in Transition, said there were far more important issues facing the Island when it came to climate change. ‘A wider ban on plastic items would be a step in the right direction, but it’s a case of too little, too slow, I’m afraid,’ he said.‘There are much bigger things we should be tackling related to transport and heating of buildings, and the government knows this.’ Mr Jones added that he would welcome the positive effect of a ban in reducing the amount of plastic escaping as litter and leading to the pollution of the seas by microplastics. UK Environment Secretary Thérèse Coffey is expected to spell out the timetable for a ban in England in the coming days. Scotland brought in a ban on a range of single-use plastics in June 2022, while similar legislation will come into force in Wales in autumn 2023.

Islanders invited to apply for grant towards e-bike

A new e-bike grant scheme has been launched in the first of a series of government measures designed to significantly reduce Jersey’s carbon emissions. Islanders now have a week to apply for the first wave of vouchers – £300 for an e-bike, £600 for an e-cargo bike or £600 for an adapted e-cycle – with 100 applicants due to be chosen at random. Further application windows are to be scheduled every three months, staggered across the next two years, to help local retailers cope with demand. Most e-bikes cost around £2,000, with some retailing for as much as £6,000.

Assistant Environment Minister Hilary Jeune said officers estimated the scheme would remove the annual equivalent of nearly 500 tonnes, the carbon emissions of 133 people. The move – which aims to help Islanders to move away from petrol and diesel vehicles – forms part of the Carbon Neutral Roadmap, which was approved by the States Assembly last year. The document outlined an initial four-year £23 million delivery plan to help Jersey reach net-zero carbon emissions by 2050, meaning the Island’s greenhouse-gas emissions would be as close to zero as possible, with the remainder balanced out by the amount re-absorbed from the atmosphere. A £300,000 pot for the e-bike grant scheme has been allocated under the Carbon Neutral Roadmap, with other plans including banning the sale of new petrol and diesel cars and small vans in 2030 and stopping the installation of new oil, gas and coal boilers from 2026.

It is not the first time the government has introduced an e-bike grant scheme, with similar initiatives having been run in 2016 and 2019. Deputy Jeune said: ‘We are doing it this way because we want to help nudge people into buying electric bikes – whether its cargo bikes, adapted bikes or normal e-bikes – because they were already thinking about buying but cost was the barrier. ‘If it was means-tested [instead of random], then we would probably have to upfront the whole cost of the bike, which would mean the money would go to a smaller amount of people. The idea behind this is to reduce carbon emissions, encourage active travel and a change of use of vehicles. That’s our main aim with this.’ Applicants will be able to select whether they want to go into the draw for an e-bike, e-cargo bike or an adapted e-cycle.

Commenting on the potential risk of grant recipients selling the bikes on for a profit, Deputy Jeune said: ‘Of course we would prefer that they utilise the bike and not sell it on, but to generate a second-hand market in [e-bikes] will also be useful in future to those who, at the moment, are unable to meet the cost of buying an e-bike, even with 10% off.’ She said that the staggered launch would help vendors to cope with demand. ‘When we were developing this scheme we worked closely with the bike shops to ensure they felt confident that they could also deliver.’

Islanders can apply for a grant at

Jersey duo in ‘near miss’ with tanker during Talisker Whiskey Challenge Atlantic rowing race

Despite a near miss with a ‘very large’ tanker, a Jersey duo attempting to row across the Atlantic Ocean have hit the half-way mark in their gruelling challenge. Peter Wright and Steve Hayes – Team DragonFish – are taking part in the Talisker Whiskey Challenge and hoping to raise £50,000 for local charities Macmillan Jersey and Durrell. After setting off from La Gomera in the Canary Islands on 12 December with no previous rowing experience, the pair have now covered 1,700 nautical miles in 27 days. They have 1,300 to go until they reach the finish line in Antigua. The duo are currently 28th out of 42 crews remaining in the race and are ranked first in the open pair class.

An update posted on their Facebook page on their behalf stated that they were worried their Automatic Identification System had broken down. ‘Recently they looked across to see a very large tanker bearing down on them. Unable to raise the bridge on their VHF, they both grabbed the fog horn and white flares ready to make as much of a warning as possible to the ship. Thankfully its direction changed a little and it passed by without issue, except for raising the heart rates of the fearless adventurers,’ they said.

The pair also celebrated Christmas and new year on the boat with their usual two hours on, two hours off rowing shift. Earlier in the race, they were forced to drop their rowing shifts down to an hour at a time. This was because they had started to suffer from the effects of sleep deprivation, including hallucinations, as they struggled to cram in what little sleep they could in between rowing shifts. Another update read: ‘If you are doing two hours on, two hours off, it feels like there are six miniature days inside a real day. Some opt to do three-hour shifts, mostly so that there are only four mini days in 24 hours – it somehow makes the day go quicker. But with one-hour shifts, you go through 12 micro-days. Having to wake up exhausted and drag yourself out onto the oars, there is no getting around it, that’s a horrendous shift pattern.’

Since day six, the pair have manually been making drinking water using a solar-power desalinator. However, this has since broken down forcing them to resort to manually pumping the water through the diaphragm instead. During their last bout of poor weather, the duo were stuck in their cabin for four days. One update read: ‘The cabin becomes overheated at the best of times, and with two people in it, it just becomes a horrible sweat box.’ A number of chargers for their devices were lost during the bad weather and the solar panels used to power the boat have not been receiving enough sunlight to keep everything running. As a result, they have lost access to the music and audiobooks they might have brought with them, forcing them to row in silence.

One-off public holiday in May could be introduced to mark coronation

A public holiday marking the coronation of King Charles III in Jersey could be introduced depending on the outcome of a States debate next month. Chief Minister Kristina Moore has signed a ministerial decision to lodge a draft amendment that, if approved, would provide for a public holiday on 8 May 2023. It is due to be lodged today and will be debated at a States sitting on 7 February.

The rationale accompanying the ministerial decision states: ‘This decision follows the UK government’s announcement for a bank holiday on Monday 8 May which will be observed in England, Scotland, Wales and Northern Ireland. The Bailiwick of Guernsey and the Isle of Man have since announced plans to mirror that arrangement. ‘The Chief Minister proposes that the Bailiwick of Jersey should similarly observe a public holiday on Monday 8 May, to ensure that the King’s coronation is observed in the same manner across the British Isles.’ In terms of resource implications, the ministerial decision said that the cost of paying staff in government and non-ministerial departments – who would otherwise be working – was estimated to be £1.38 million per day. ‘This is not an additional cost to the States,’ it added.

Market Update

European markets are higher today with shares in France leading the region. The CAC 40 is up 0.63% while London’s FTSE 100 is up 0.49% and Germany’s DAX is up 0.37%.

The Dow Jones Industrial Average gained 216.96 points, or 0.64%, to close at 34,189.97. The S&P 500 added 0.34%, to end at 3,983.17.
The Nasdaq Composite closed up 0.64% at 11,001.10, marking a five-day winning streak.
Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 1.04% and the Shanghai Composite rose 1.01%. The Nikkei 225 lost 1.25%.