Client Weekly Update – Friday 11 November

Remembrance Sunday

A series of commemorative events will be held over this weekend of remembrance

Jersey residents will gather at the Cenotaph in St. Helier at 11:00 a.m. GMT today to observe a two-minute silence, which will be followed by an Armistice Day service. Later, at 16:30, Falkland veterans will meet at the Cenotaph for a blessing of commemorative benches.

On Saturday and Sunday, there will be further events on the island.

The commemorative benches being blessed on Friday were produced to mark the 40th Anniversary of the Liberation of the Falkland Islands. Falklands veterans raised funds to commission their production. On Saturday 12 November, there will be a 100-year Celebration Service at St Thomas Church for the Jersey Branch of the Royal British Legion.

His Excellency the Lieutenant Governor, the Bailiff and the Chief Minister will be present for the event at 20:00, Jersey’s government said. The Remembrance Sunday Service will be held at the Cenotaph at 11:00, which will also be marked by a two-minute national silence.

The Bailiff, Sir Timothy Le Cocq said: “There are a number of occasions over the coming days where we will have the opportunity to gather together and remember those who gave their lives in the service of their country. 2022 has been a momentous year where we have seen Jersey-based regular and reserve soldiers and Jersey Veterans come out in numbers to support important events. This is our opportunity to show our respect for them and those that went before them.”

Additional spending and tax cuts could threaten government finances and fuel inflation

A panel of economic experts has said that more spending and tax cuts could hurt the government’s ability to pay its bills and make inflation worse. 

The Fiscal Policy Panel, which provides advice on public finances to the government and States Assembly, has also warned that while the Island’s economy remains strong, a range of factors create significant risks. 

Insufficient money in the Climate Emergency Fund to cover the transition to net zero, overly-ambitious timetables for capital projects and the high cost of housing are all cited in the panel’s annual report, released on Wednesday. 

Panel chair Dame Kate Barker said: “Whilst the global macroeconomic outlook has worsened, Jersey’s economy is in a good position to weather global shocks. Jersey is in an unusual situation – the economy is strong, and rising interest rates will drive higher profits in the financial sector, which will, with a lag, result in higher tax revenues. At the same time, high inflation and rising interest rates are likely to create more immediate pressures for some households.”

The panel advocates using surpluses to rebuild the Stabilisation Fund and Strategic Reserve, pointing out that the latter fund is below the recommended level. 

Dame Janet added: “Additional spending and tax cuts are not prudent given the stage of the economic cycle, posing a concern to the future sustainability of government finances and potentially adding to inflationary pressures. They will also limit the ability of the Government to provide targeted support or fiscal stimulus quickly should the economic outlook deteriorate.”

The panel’s recommendations include:

– Adopting a fiscal strategy that steers a careful course between avoiding a sharp downturn and not overheating the economy

– Reacting quickly to provide additional targeted support should it be needed to counter the adverse effects of inflation, which the panel forecasts to peak at 12% by the end of 2022 before falling back

– Taking care to ensure major capital projects do not overlap, and identifying smaller projects which could be paused, or implemented quickly to support the economy

– Addressing the cost of housing as a priority, avoiding interventions which would boost short-term demand and support prices

– Reconsidering the strategy for financing these challenges

Bank of England base rate rise Jersey’s government considers help for homeowners following

The Treasury Minister said that phasing out tax breaks for mortgages is being considered because interest rate hikes have made payments for many people impossible to make. 

Deputy Ian Gorst confirmed that discussions were being held about the future of mortgage interest tax relief, which was cut as part of the 2016 Budget and is due to be phased out completely by 2026.

The scheme enables Islanders to claim tax relief on loan interest payments for the purchase or extension of their main property. 

Many households coming to the end of fixed-rate terms are facing the prospect of a massive rise in their monthly repayments after the Bank of England recently raised its base rate to 3%, with threats that further hikes could be coming.  

Speaking at the Chamber of Commerce lunch yesterday, Deputy Gorst said that officials from his department had been holding talks with Island lenders to help those struggling. 

He said: “An area of particular concern is the high mortgage costs facing some Islanders. The good news is that many are sheltered from rising interest rates through having fixed-rate deals. While none of us would have wanted to see the rapid and destabilising rise in interest rates, it will be taking the heat out of the unsustainable runaway market.”

”But that is of no comfort to those Islanders who are not sheltered from fixed rates and those who have had to borrow at high earnings multiples in recent times, just to get their foot on the housing ladder. Officers are in conversation with Island banks, who have assured the government that they will work with their customers to keep them in their homes wherever that is most appropriate and achievable.” 

“We will continue to monitor the situation and are considering the current phasing of the mortgage interest tax relief.” However, he declined to give any further details as to what those considerations might entail.

The Treasury Minister also reiterated his belief that GST on food should not be scrapped. Later this month, the States Assembly is due to debate a proposition from Deputy Raluca Kovacs on whether the 5% tax should be scrapped from food items. 

Deputy Gorst said: “I remain opposed to departing from our policy of keeping GST low – at 5% – broad, and simple – to keep business costs low as well as government’s administration costs. I stand by those longer-term tax policy principles. We always recognised that GST on food needed to be offset for people and it has been offset ever since GST was introduced through increased tax allowances, increased income support, and through the GST Food Bonus, which is now called the Community Cost Bonus.‘While I understand and respect the motives of those who would propose this it would put more money into the pockets of well-off Islanders then those on the lowest incomes.”

He added that any plans to remove GST would lead to more red tape for businesses and would be unable to be delivered on a ‘timely basis’.

Jersey politicians ‘likely’ to be asked to back original Overdale hospital scheme

A proposition asking the government to ‘stick to the original plan’ for the new hospital is likely to be brought forward by the politician previously responsible for the scheme.

Deputy Lyndon Farnham said he had spoken to fellow States Members and concluded that ‘the numbers will be very close’ if such a vote was to take place.

He made the comments during the latest episode of Bailiwick Express’s ‘Politics Disassembled’ podcast while answering questions about the recently published review of the Our Hospital plans. 

The review, which was undertaken by expert adviser Alan Moore, recommended abandoning the proposed single-site facility at Overdale in favour of a hybrid model that would include using the existing Gloucester Street site and adjacent land at Kensington Place. 

Deputy Farnham, who held political responsibility for the Our Hospital project under the previous government, revealed he was ‘likely’ to bring a proposition to continue with the existing plans, which received planning approval earlier this year.

He said: “I don’t think the Assembly as a whole is particularly pleased or impressed with the review – simply because it is light on detail and it lacks any sort of evidence to give credibility to its findings.”

“I’m trying to understand what the government plans to do. I am minded to bring a proposition that would ask the States Assembly to request the government to stick to the original plan, come back within the parameters of the existing financial agreements by the previous Assembly, [and] come back with some different financing models,” he added.

He said the situation was not ‘as cut and dried as many might think it would be – and certainly worth fighting for’. Deputy Farnham continued: “At the end of the day, politicians – especially ministers – have to put aside, perhaps, a new-found loyalty to their friends and colleagues in the government and do what is the best thing for Jersey. That is the argument that I am going to have to make.”

Deputy Farnham recently wrote to Chief Minister Kristina Moore, suggesting that they take part in a live debate about the hospital plans using the government’s studio in the Parade. In response, Deputy Moore said that the States Assembly provided the ‘appropriate forum’ for political debate – and added that ministers would be taking part in a public question-and-answer session on 15 November which will be available for Islanders to view ‘on a number of public platforms’.

People set to observe Armistice Day silence marking end of First World War

People across the Channel Islands and the UK are set to fall silent to mark Armistice Day today – as the Foreign Secretary condemns Russia for bringing bloodshed back to Europe. 

Poignant services will be held across the country for the anniversary of the end of the First World War, and a two-minute silence will be observed at 11 a.m. to remember those who have died in military conflicts.

The Duke and Duchess of Gloucester are due to attend the National Memorial Arboretum Armistice Day Service in Staffordshire, and services are also being held in London, Edinburgh, Belfast, and Portsmouth. 

In Edinburgh, the city’s depute lord provost, councillor Lezley Marion Cameron, will join veterans, serving personnel, and the public to pay tribute at the city’s Garden of Remembrance.

Foreign Secretary James Cleverly will attend a remembrance service hosted by French President Emmanuel Macron in Paris. 

Mr Cleverly said: “Since 1918 we have marked Armistice Day and paid tribute to the brave men and women who have served to give us peace. Yet as we salute our troops this year, this peace has been shattered by a Russian aggressor. As we honour the war dead of the past, we also remember Ukraine’s fight for freedom today.”

“The UK stands steadfast with our friends and allies in defence of freedom and democracy in Ukraine and I am proud to stand shoulder to shoulder with an historic ally in Paris today.”

Jersey teen football star to join Wales squad in Qatar

17-year-old Jersey football star Luke Harris is on his way to Qatar for the World Cup after being selected as a backup on the Wales squad. 

Hot on the heels of signing a professional contract with Fulham, former St. Clement pupil Harris, whose father is Welsh, was asked to join the national team in September. While he made the bench for a game against Belgium, he is yet to see action on the pitch for Wales.

Manager Robert Page told BBC Sport that his intention in adding Harris to the squad was to help him gain experience in a major tournament, alongside 18-year-old Jordan James, and help future-proof the Welsh side. 

He said the team had been “really impressed” with the pair during the Nations League camp in September, adding: “In the future when the senior boys decide they’re not going to play for Wales anymore, it won’t be too much of a culture shock and the change won’t be so severe,” he said

They’re not going to be in the 26, but for them to travel with the squad, see how they conduct themselves on and off the pitch, is going to be massive for us moving forward.” 

The young midfielder’s football career started in Jersey. Harris played a key role in the St. Clement’s Primary School team, leading them to become the first Jersey side to win the Danone Nations Cup in 2016 at Leicester City’s King Power Stadium, before joining the Fulham Academy.

A beach trip in November? Sunny skies and temperatures of 17°C forecast for Jersey this weekend

Islanders could enjoy a bonus trip to the beach this weekend – as temperatures are set to rise into the high teens. Mainly sunny conditions and highs of 17°C are expected on Saturday and Sunday as a plume of warm air from Africa pushes north over much of Western Europe. 

Some parts of central and southern France could see temperatures as high as 22°C.

The unseasonably warm November comes following the joint-mildest October on record in what has been a year dominated by concerns over climate change. Figures released by Jersey Met show that so far in 2022:

  • Every month except June has had below-average rainfall
  • The Island recorded its warmest-ever summer with an average temperature of 19.6°C – narrowly beating the famously hot summer of 1976
  • Jersey smashed its all-time temperature record, with 37.9°C being registered on 18 July
  • It then sweltered on its hottest-ever night, when the temperature did not drop below 25.5°C
  • And saw a record four so-called tropical nights (where the temperature remains over 20°C) – more than any other year, as well as the latest tropical night, on 13 September
  • The Island also had a record number of days (eight) when the mercury topped 30°C
  • And for the first time ever, the sea temperature has remained above the long-term average every day of the year so far
  • The warm weather is set to be replaced by more changeable conditions early next week when temperatures are expected to drop back down to 14°C or 15°C

Jersey end-of-year pension contribution reminder

Please note, if clients wish to make a lump sum contribution, to obtain tax relief for 2022, the funds must be cleared in the Trustee’s bank account before 31 December 2022. 

If the funds are to be invested before year-end, they must be cleared in the Trustee’s bank account by 9 December 2022.

Any requests for lump sum withdrawals will need to be with the Trustee by 9 December 2022. Any switch requests will need to be with the Trustee by 9 December 2022.

Unfortunately, we are no longer able to receive contributions via cheque.

Should you have any queries, please call us and we’ll be happy to help.

Mixed markets

European markets are mixed today. The CAC 40 is up 0.75% while the DAX gains 0.50%. The FTSE 100 is off 0.34%.

Yesterday, the S&P 500 added 207.80 points, or 5.5%, to 3956.37, while the technology-focused Nasdaq Composite soared 760.97 points, or 7.4%, to 11114.15. The Dow Jones Industrial Average rose 1,201.43 points, or 3.7%, to 33715.37.

Asian markets closed sharply higher today with shares in Hong Kong leading the region. The Hang Seng is up 7.70% while Japan’s Nikkei 225 is up 2.98% and China’s Shanghai Composite is up 1.69%.