Client Weekly Update – Friday 25 November

Jersey in ‘strong position to grow economy by 2%’

Jersey has the capacity to grow its economy over a sustained period to boost quality of life and sustain and improve its public services, according to the Island’s chief economic adviser.

Thomas Holvey, who earlier this year took up his role leading the directorate which advises the government on all aspects of economic policy, said it was realistic to look for continued growth in spite of current economic pressures and a gloomy global outlook.

“If we can hit 2% real growth over a long period, we’ll have done exceptionally well. Between 1% and 2% would be very, very good, and that is very meaningful for people. It’s not easy but it’s also not unachievable, I really do believe that,” Mr Holvey said.

Echoing the optimistic tone of the Fiscal Policy Panel’s annual report published earlier this month, Mr Holvey said that by virtue of its levels of reserves, the absence of high levels of debt and what he described as ‘a strong balanced economy’, the Island was in a strong position. Whereas the UK and global positions are due to worsen in 2023.

Mr Holvey expressed optimism that: “The Jersey position should stay relatively strong from a high base. Jersey has got a very resilient economy. It’s been through two large economic shocks of Brexit and Covid, plus now the Ukraine war, and its proved highly resilient to those economic shocks in a way that the UK economy has not.”

He added: “While financial services is our most important sector in terms of pure growth, all the sectors have a significant role to play in a balanced economy. In terms of pure growth, the financial sector obviously is that key element to wider things, and it’s holding up well.”

While he said that a return to what he described as ‘normalised interest rates’ was good for the banking sector and therefore the Island’s tax revenues, he acknowledged that interest rates would hit householders faced either with renegotiating fixed-term mortgages, or dealing with variable rates.

However, he expressed confidence in local banks’ stress-testing, which he said indicated that the majority of homeowners were in a strong position to deal with repayment increases, likely to be between 3% and 4%, even if this would affect spending in the local economy.

“Banks are reassuring us that they did their checks beforehand and the sensitivity levels mean that people shouldn’t be pushed to breaking-point levels and the risks aren’t that high,” he said, adding that mass numbers of Islanders falling behind on repayments and the prospect of assets being called in were unlikely.

Former chief economist for the government of St Helena and a former head economist at the UK government’s cabinet office, Mr Holvey joined the civil service in Jersey from the UK Infrastructure Bank where he was the chief economist and chief impact officer.

Jersey in a good position to weather the economic storm

There will be more losses from the town centre and retailers will come under further pressure as a result of the economic climate – but the Island is in a good position to weather the storm.

Those were the key messages from economist Harvir Dhillon, author of the British Retail Consortium’s data and insight publications, who was the guest speaker at a Jersey Business event.

With his visit coming as shop owners gear up for what has traditionally been their most lucrative season, at a time of huge economic stress, Mr Dhillon urged retailers to look at their own cost management, as well as ensuring that they provide the best customer experience.

“It’s highly likely that many businesses will be under severe pressure,” he said.

“Retail insolvencies have risen to their highest level since 2012 and the expectation is that these insolvencies will rise throughout 2023. The economic environment, sustained pressure on margins through not just input costs but also consumers with less disposable income, means many retail businesses that had flourished before may find it increasingly difficult into next year.”

Acknowledging that many consumers were facing pressures on their wallets from a combination of rising fuel and power prices, increased food costs, and rent and mortgage payments, he said that retailers needed to be ‘sensitive’ to those pressures.

However, Mr Dhillon, who works with BRC members using data to identify local trends, said that Jersey was in a more positive situation than many areas of the UK.

“I think Jersey benefits from the fact that its medium household income is considerably higher than the mainland,” he said.

“There are many affluent households here who will likely have some buffer and be better able to weather a cost-of-living storm. Also, trading hours in Jersey do shift and there is a real feel about the festive season here, so Jersey is well placed to have that footfall and some Christmas cheer.”

Adapting to the changing environment, particularly in relation to digital, was also critical for shop owners, said Mr Dhillon, who added that, before Covid, one in five sales took place online, but that the figure had now risen to one in four. The permanent rise in online sales, he added, was likely to increase as more people became comfortable with buying that way.

“Those retailers with a digital arm will be likely to absorb any economic shocks better,” he said.

Despite the gloomy economic outlook, Mr Dhillon said history had proven that times of economic downturn also offered opportunities. What was clear, he said, was that nobody expected the high street of Christmas 2023 to look the same as it does today.

He urged retailers to look at data to help understand how to best position their own businesses to weather the storm, and to create a ‘shopping experience’ to entice customers.

Drive an EV and cut air pollution

Daniel Butler-Hawkes, energy solutions officer at Jersey Electricity; the environmental benefits of battery powered transport.

In 2020, Jersey became a signatory, through the UK, to the Paris Agreement and the International Convention on Climate Change.

As a result, the Island committed to an ambitious goal to cut carbon emissions by 68% by 2030 and 78% by 2035 – two key milestones on the way to the overall goal of achieving net-zero emissions by 2050.

While hitting these targets will not be easy, such an outcome is clearly aligned with Jersey Electricity’s vision of a zero-carbon future.

To reach net zero by 2050, the government’s Carbon Neutral Roadmap, adopted in April 2022, sets out several policies related to transport. This is not surprising, as the roadmap identifies transport as the largest source of greenhouse-gas emissions, accounting for around 36%.

The roadmap outlines the importance of:

  • Speeding up the adoption of electric vehicles, with plans including subsidising their purchase
  • Phasing out petrol and diesel vehicles from 2030
  • Supporting people to walk, cycle or take the bus


But why are EVs seen as such an important part of this strategy and are they really better for the environment than traditional petrol and diesel cars?

According to research published by EDF Energy, the biggest benefit of EVs is the contribution they make towards air quality. As they do not have a tailpipe, they do not emit any carbon dioxide, which significantly reduces air pollution.

On this basis, one EV can save an average 1.5 million grams of carbon dioxide each year – the equivalent of four return flights between London and Barcelona.

And it is not only air pollution which EVs can help to address. As they are much quieter than petrol and diesel vehicles, they also have a positive impact on noise pollution.

While such benefits are undeniable, many people still question how the production of EVs impacts the environment. It is true that a lot of energy goes into their production, mainly because of the processes involved in manufacturing the lithium-ion batteries.

However, research by the International Council on Clean Transportation showed that ‘more than a third of the lifetime CO² emissions from an electric car came from the energy used to make the car itself’.

Because of this, EVs remain a greener option overall, with the European Energy Agency finding that, even when the electricity needed to charge the vehicles is taken into account, an EV’s carbon emissions are still between 17% and 30% lower than those associated with a petrol and diesel car.

And, as Jersey Electricity uses low-carbon electricity, these emissions are reduced even further. Collectively, we are becoming more conscious of our carbon footprint. By choosing electric vehicles, we can have a significant impact.

Jersey Reds ‘too good for Championship’

Two of Championship Rugby’s leading figures are calling for the RFU to make key changes which will allow the likes of Jersey Reds and Ealing Trailfinders to join the Premiership.

Nottingham head coach, Craig Hammond ,and Hartpury chief, Mark Cornwell, believe the dominance of the second-tier’s top two so far this season sends a strong message to both the national governing body and Premiership officials – and that they should look at promotion and relegation very differently.

The pair have seen their sides beaten heavily by Jersey and Ealing in the Championship Cup in recent weeks and Hammond says it is up to the RFU to change its approach to allow rugby to grow.

The RFU announced in September that it will reduce the stadium capacity required for promoted sides from next season – from 10,001, to 5,000, which is in line with France’s Top 14, the URC and football’s Premier League. However, that is only for a team’s first season in the top flight.

After that, they must have funded plans for 10,001 approved, at the very least.

Hammond said: “If the RFU don’t allow promotion then we could be looking at next season having both Jersey and Ealing, plus Wasps and Worcester. It will be like four Premiership-quality clubs, making the Championship, as a league, almost as tough as the Premiership, especially for part-time sides like little Nottingham.”

“But we can only talk. It is up to the people at the RFU and the Premiership to make the big decisions, but I’d like to see them get a better hold of this, and how the English player-base is spread across both leagues for all of us.”

He added: “Ealing have a massive squad, lots of money there, a great ground with good facilities. When you fly over to Jersey, the Reds have come a long way, have top-level facilities too and great support down there on the Island. Jersey and Ealing really are Premiership quality now, so it would help us all in the Championship if they did go up, and it could end this myth that the best tier-two teams can’t compete with the Premiership sides.”

Meanwhile, Cornwell is impressed with how both Jersey and Ealing have improved despite the RFU’s funding drop for Championship sides. They now receive only £288,00 in central funding a season, down from £500,000 in 2019/20.

“We all know it’ll be between Ealing and Jersey on who goes up,” he said.

The Cornishman added that he feels the game’s financial issues – leading to Wasps and Worcester going into administration and being automatically relegated – gives the RFU the opportunity to make key changes.

“There’s still a step in my mind between them now and the Premiership,” he explained. “You only have to watch any Prem games and everyone knows what a step it is between the leagues. I’m not saying they are there yet, but they are closing it and more ready than any before to make that final step.”

“The RFU have changed their mind on the ground capacity issue, but they need to do more. The problems at Wasps and Worcester should allow them to accept the mistakes and take their head out of the sand. I would like to think they’ll be more open now otherwise it won’t make financial sense for teams like Jersey to go up. It’ll be a shame if they don’t and for the good of the game as a whole, they need to.”

Having attracted new financial backers this season Jersey Reds officials have made public their Championship title-winning vision, but they have given themselves until 2025. Talk of promotion has also been reserved, although it has but not ruled out as an option inside the next decade.

At the World Cup: England and Wales back in Group B action as the Netherlands take on Ecuador in Group A

The second round of World Cup group games begins today.

Wales face Iran in Group B at 10am; hosts, Qatar, then take on Senegal in their Group A clash at 1pm; the Netherlands take on Ecuador at 4pm; and England round off the day’s play when they face the USA at 7pm.

Rob Page’s Wales side kick-off early on, taking on Iran at 10am and looking to build on a well-earned 1-1 draw against the USA on Monday.

Gareth Southgate’s England kick-off as the last game of the day at 7pm, facing an impressive USA side but buoyed from their 6-2 thrashing of Iran.

In Group A, hosts Qatar take on Senegal – looking for their first points of the competition – while Louis van Gaal’s Netherlands face Ecuador, with the sides joint-top of the group after winning 2-0 in their opening games.

England are top of Group B on three points having beaten Iran 6-2 on match-day one. Wales and USA are locked on a point apiece following their draw on Monday, while Iran prop up the group.

If England secure another three points, they will qualify for the round of 16 and remain in top spot. Victory could even seal qualification as group winners provided Wales have drawn with Iran.

Were Wales to suffer defeat, Iran could still mathematically finish above England with another win over USA.

Christmas turkey shortage: Islanders face deadline for orders

It’s last orders for your Christmas turkey, according to a Jersey butcher, due to a shortage of the birds caused by avian flu. Rob Stevenson, owner of the country butchers at Rondel’s Farm Shop, said 5pm tonight was the deadline his suppliers had given him for orders of his free-range turkeys.

That is ten days earlier than his usual cut-off date for Christmas, which has always been the first weekend in December.

Poultry farmers in the UK have reported being ‘absolutely hammered’ by bird flu outbreaks this year. Mr Stevenson said: “We were told on Tuesday by [turkey farmer] Paul Kelly himself that we have until this evening to place our orders. We can’t take any orders after that. We’ve never known this before in the 16 years we’ve been butchers here.”

He added that orders were at their normal level for this time of year. “We’re on target at the moment. We’ve even taken calls from customers who are abroad on holiday making sure their order is in on time for Christmas. Everything is going to be fine as long as the boats are running.”

Mr Stevenson said 155 orders for Kelly Bronze free-range turkeys were already placed and a further 45 for Grove Smith turkeys. He added that he had also managed to source free-range turkey crowns from Italy to ensure that anyone missing the deadline can still have a traditional Christmas dinner.

The joint owner of Woodlands Farm Butchers, Avelino De jesus, said he was not worrying about the supply of turkeys yet and was still taking orders until the first weekend in December. Mr De jesus said:

“Some people are ordering earlier this year, but some don’t like the price of a turkey – it has increased by 20–28%, due to the cost-of-living crisis, the price of feed, plus avian flu. But I’m not worrying at the moment. Our suppliers say it will be fine and I think it could be even busier than last year.”

Mixed markets

European markets are mixed. The FTSE 100 is higher by 0.19%, while the DAX is leading the CAC 40 lower. They are down 0.13% and 0.12% respectively.

Yesterday, the Dow Jones futures rose less than 0.1% vs. fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures climbed 0.35%.

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.40%, while the Hang Seng led the Nikkei 225 lower. They fell 0.49% and 0.35% respectively.