European shares opened lower at the start of the week’s final session as worries over the financial stability of banks still weighing on sentiments. Markets closed lower Thursday as investors digested the latest interest rate hikes by the U.S. Federal Reserve and the Bank of England. The CAC 40, Germany’s DAX, and London’s FTSE 100 are down by 1.4%. The pan-European Stoxx 600 closed down 0.2%, having slightly trimmed losses after the U.K. central bank announced its widely-expected 25 basis point increase. The blue-chip index had been trading lower through the morning.
U.S. stocks are mixed today, with Dow Jones Industrial Average futures sliding 90 points or 0.3%. S&P 500 futures dipped 0.1%, while Nasdaq 100 futures were 0.1% higher.
Asian markets are also mixed today, with the Hang Seng leading losses in Hong Kong, trading 0.65% lower, while the Hang Seng Tech Index was up 0.61%. Japan’s Nikkei 225 was down 0.13% and China’s Shanghai Composite closed by 0.64%.
Monetary policy committee votes to increase base rate to 4.25% after February’s surprise rise in inflation
The Bank of England raised interest rates by a quarter of a percentage point to 4.25% yesterday in response to higher than expected UK inflation and signs that Britain’s economy is holding up better than feared. In a fortnight of heightened unease across global financial markets, the Bank’s monetary policy committee (MPC) voted by a majority of seven to two to increase the base rate for the 11th time in a row. It came after an unexpected jump in inflation to 10.4%, from 10.1% in January, fuelled by food prices increasing at the fastest pace in 45 years. The Bank’s official target for inflation is 2%.
The pound rose against the dollar as financial markets moved to anticipate one more quarter-point increase at the MPC’s next meeting in May. However, economists said a 12th and final rate increase to 4.5% hung in the balance amid signs that inflation would fall sharply over the coming months.
Rates have now risen by 4.15 percentage points since December 2021, the most aggressive tightening of UK monetary policy for decades. Threadneedle Street left open the option of a further rate increase, but said it would only take action if there were signs of “persistent pressures” from inflation. Andrew Bailey, the Bank’s governor, said there were signs that the price spiral was “peaking”, telling broadcasters: “But of course it’s far too high. We think it’s going to come down sharply, really from the early summer onwards. But we haven’t seen that happen yet.” In an upbeat assessment, the Bank said it was no longer forecasting a technical recession, whereby the economy shrinks for two consecutive quarters. UK gross domestic product (GDP) was now probably on track to grow slightly in the second quarter of the year, after a previous forecast of a 0.4% drop in activity.
“Back at the beginning of February, we were really on a bit of a knife-edge as to whether there would be a recession. Certainly, we thought the economy would be quite stagnant,” Bailey said. “It’s not off to the races, let’s be clear. But I’m a bit more optimistic.” Central banks on both sides of the Atlantic have pushed ahead with rate increases despite fears over the collapse of Silicon Valley Bank and the Swiss-government brokered rescue of Credit Suisse by its rival lender UBS. The US Federal Reserve raised its interest rate on Wednesday by a quarter of a percentage point to a range of 4.75%-5%. The bank of England said it was closely monitoring the economic effect of the turbulence in the banking industry, adding that it would issue a full assessment in its next update on the economy in May. Bailey said he did not believe the global economy was facing a repeat of the 2008 financial crisis, adding that he was confident the banks in the UK were in a much stronger position than 15 years ago.
Interest rates may have peaked and inflation to fall ‘steadily’ in Jersey this year, experts say
Interest rates may have peaked earlier than expected and inflation in Jersey is set to fall ‘steadily’ this year, a panel of independent economic advisers have told the Treasury Minister. The updated modelling from the Fiscal Policy Panel will bring some relief to struggling households facing the highest rise in the cost of living since the 1980s and the end of the era of low Bank of England base rates which have seen dramatic increases in mortgage repayments. But although inflation is set to drop from a peak of 12.8% in the first quarter of this year, the rate is expected to remain ‘elevated’, averaging 9.9% for 2023.In its update, the FPP said that despite global uncertainty, Jersey’s economy was operating ‘above capacity’, as data suggested a ‘growing economy but a tight labour market’. It cites an 11% growth in house prices in 2022, low unemployment, a 6.2% rise in average earnings in the 12 months to June last year and ‘positive future and current business activity’ reported last year in the Business Tendency Survey completed by company bosses.
The report says that ‘as such, growth is expected to continue into 2023’ but with non-finance firms facing the greater pressures. Although homeowners will welcome news that interest rates may have plateaued, the earlier peak is expected to result in slower growth in the finance sector, where higher rates drive greater profits. ‘Profits in the financial sector are now expected to have grown faster in 2022 with slower but still high growth in 2023,’ the report states. ‘As such, the panel has revised its forecast for real GVA [a measure of economic productivity] growth in 2022 from 2.5% to 3.4%, and from 5.9% to 3.9% in 2023 Given the revisions to the economic forecasts following the publication of the States of Jersey 2022 Annual Report and Accounts, the panel said it was ‘likely that tax receipts will be higher than previously forecast with the fiscal position aiming to generate significant surpluses’. The panel, chaired by Dame Kate Barker, who sits alongside Francis Breedon and Richard Davies, said the government should use the extra funds to pay off debt and boost reserves. ‘The panel recommends surpluses are used to reduce outstanding short-term borrowing. When considering long-term borrowing, the key factors to be considered will include the likely cost of new borrowing, as compared with the projected returns on Jersey’s investments.
‘The obvious question is “what is going on?” ‘
Jersey is set to have its fourth chief executive in three years after Suzanne Wylie resigned yesterday just days after it was revealed two other high-ranking civil servants are to leave their posts. Mrs Wylie – who was appointed to the £250,000-a-year job last February – is to return to Belfast to become chief executive of Northern Ireland’s Chamber of Commerce. In January, chief operating officer John Quinn took voluntary redundancy, while last week director general for health Caroline Landon and chief nurse Rose Naylor both stepped down. The government has confirmed that Mrs Wylie has a six-month notice period – although this can be reduced by mutual agreement – and that there are no clauses in the chief executive’s contract relating to additional payments. Mrs Wylie informed Chief Minister Kristina Moore of her intention to resign late last week and members of the States Employment Board were told yesterday morning. Before taking up her position in Jersey, Mrs Wylie was the chief executive of Belfast City Council and she will be returning to the city to be closer to her family, the government has said.
The Northern Ireland Chamber of Commerce has confirmed that Mrs Wylie is to become its new chief executive and is expected to take up her new role in the summer. She was appointed as the Island’s first female chief executive in September 2021 and formally started in February the following year. Deputy Moore said: ‘I would like to thank Suzanne for her professionalism and hard work during her time as chief executive. Suzanne has had a positive impact since starting with the Government of Jersey and we respect her wishes to return to Belfast. ‘Suzanne is successfully working through transformations across the government, from the turnaround team in Health and Community Services to the formation of Jersey’s Cabinet Office. ‘These priorities have been dealt with alongside navigating officers through the recovery stages of the series of major incidents that have affected our island. ‘Suzanne will continue in these endeavours for the next few months while we look to appoint a successor. We wish her all the success in her future.
Deputy medical officer of health due to retire
The senior clinician at the forefront of Jersey’s response to the Covid-19 pandemic is one of three consultants who are due to retire during the next six months. Deputy medical officer of health Dr Ivan Muscat, who is also a consultant specialising in microbiology, infection and genitourinary medicine, will retire next month. His departure will be followed by the retirement of consultant obstetrician and gynaecologist Dr Kathy Gillies in June, while Dr David Ng, consultant gastroenterologist, is due to retire in September.
Health Minister Karen Wilson paid tribute to the departing staff and outlined plans for their replacement, as well as other new consultants. She said: ‘All three have provided wonderful care and treatment to Islanders during their careers and I wish them all the best in their future endeavours. ‘Although we are losing some valued colleagues, I would like to reassure Islanders that plans and funding are in place to find their replacements – in fact, a full-time consultant in sexual health, HIV and viral hepatitis has recently started in post, which is the first time Jersey has had a full-time consultant in this area.’ Deputy Wilson said advertising for replacement consultants for Dr Muscat, Dr Gillies and Dr Ng had now started, in addition to a total of nine new consultants. ‘It is encouraging that we have attracted such a high number and calibre [of candidates] and I am confident this success will continue in the next round of recruitment,’ she said.
Declining birth rate ‘could have impact on the working-age population later on’
Jersey’s birth rate is continuing to fall, according to a new report. The rate in the Island last year was 8.1 live births per 1,000 of the population, compared to 11.4 per 1,000 in 2012, the Births report has revealed. The report also states that the Island’s fertility rate is at its lowest for 20 years, with an average of 1.32 births per woman between 2020 and 2022 – which is lower than in England and Wales. Public health director Professor Peter Bradley (pictured) said: ‘A lower birth rate could have an impact in a few decades’ time on the number of adults of working age. ‘Jersey’s population depends not just on those born here but those migrating in, or out, so it’s not possible to draw concrete conclusions about the impact of declining birth rates on the future dependency ratio.’
Professor Bradley added: ‘For this report, we haven’t undertaken any research into the reasons why the birth rate is declining. ‘However, birth rates have declined across England and Wales over the last decade too, as shown in the profile, so it’s not something that’s unique to Jersey.’ The report has also shown the number of women giving birth aged 30 to 39 had risen by 15% between 2020 and 2022. The report stated: ‘The average age of mothers giving birth in Jersey was 33 years in 2022; in England and Wales the average age of women at childbirth was 31 years in 2021.’ The report says that there were fewer conceptions for women aged 17 and under in Jersey compared to the UK. There were an average of 7.7 conceptions per 1,000 women under 17 in Jersey between 2020 and 2022, compared to 15.1 in the UK. In addition, the Island’s infant mortality rate was lower than the UK. The report continues: ‘The infant mortality rate in Jersey was 2.3 deaths per 1,000 live births during the three-year period 2020–2022. ‘England had an infant mortality rate of 3.9 per 1,000 live births in 2019–2021.’
Meet Jersey’s new Seigneur – who comes from Colorado
US citizen James Kaye recently became Jersey’s newest Seigneur after travelling across the Atlantic and appearing before the Royal Court to acquire the ancient feudal title.His visit to the Island followed a successful bid for the title of Seigneur of the Fief ès Poingdestre, which was put up for auction by Islander Sam Le Quesne to raise funds for the Bailiff’s Ukraine Appeal.But who is the mysterious new Seigneur? And why did someone from Colorado, with no prior connections to the Island, decide to spend £55,000 to gain the ceremonial title? Mr Kaye is originally from the south-east of the United States. He joined the US Army at a young age and fought in the Iraq war. Now married with three children, he works as an engineering manager for Lockheed Martin Space in Denver, Colorado.
Despite having no previous connections to the Channel Islands, Mr Kaye said that he had ‘known about Jersey, Guernsey and Sark for at least ten years or more’ because of his love of history.He explained: ‘The US and Jersey in particular have a very close association through history with Sir George Carteret, Seigneur de St Ouen, being the first governor of New Jersey. I’ve always enjoyed reading history and that’s what led to my knowledge of the Channel Islands. ‘Most of my family emigrated from Wales, England and France, so my only connection is my love of history and now my Seigneury.’ Mr Kaye heard that the Seigneur du Fief ès Poingdestre title was up for sale through complete chance. He stumbled across the information through a ‘random Google search’ while doing research on Sir Edmond Andros, a Jersey Seigneur and the first governor of colonial New York. ‘It must have been the universe telling me something,’ he said. ‘I felt compelled to place a tender.’ Mr Kaye explained that he decided to bid on the title because of a combination of factors. He said: ‘Apart from that it was going to a great cause, I saw this as a wonderful way to become a part of the history I’d studied for so long. I can’t think of a more beautiful place with wonderful people to try my best to become a part of.’ Mr Kaye described feeling ‘elated’ when he found out that he was the successful bidder.
The new Seigneur was also delighted that the money from his bid would be going towards humanitarian relief work in Ukraine. Mr Kaye said: ‘I think that Jersey of all places understands what it’s like to be invaded, and the jubilation experienced when you’re liberated. I hope to one day attend a Liberation Day in Kyiv.’ Mr Kaye has recently returned to Colorado after completing an 11,000-mile round-trip to appear before the Royal Court in order to acquire his new title in person. He described his trip to Jersey as ‘lovely’, adding that it was worth the long journey.