Client Weekly Update – Friday 30 September

Truss insists mini-budget is the ‘right plan’ despite market turmoil

Prime Minister Liz Truss has insisted the Government’s tax-cutting measures are the “right plan” in the face of rising energy bills and to get the economy growing despite market turmoil sparked by the Chancellor’s mini-budget. 

In her first public comments since the mini-budget market chaos, Ms Truss defended Chancellor Kwasi Kwarteng’s measures, insisting “urgent action” was needed, although she admitted the Government’s decisions have been “controversial”.

The Prime Minister told BBC Radio Leeds: “We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.”

 “Of course, that means taking controversial and difficult decisions, but I am prepared to do that as Prime Minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen.”

On Wednesday, the Bank of England launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.

The Bank announced it was stepping in to buy up to £65 billion worth of government bonds – known as gilts – at an “urgent pace” after fears over the Government’s economic policies sent the pound tumbling and sparked a sell-off in the gilts market, which left some UK pension funds teetering on the brink of collapse. 

The FTSE 100 Index has also been hit by marked volatility amid the bond sell-off and wider global recession fears, falling by more than 2% at one stage in early trading on Thursday after a rollercoaster ride on Wednesday.

Ms Truss faced public questioning about her economic plans for the first time following the fallout from the mini-budget as she toured regional BBC radio stations in a morning round of interviews. 

This is about making sure people are going into the winter not worried about high fuel bills, which is what we were looking at. “It was simply unconscionable that we could have allowed that to happen.”

She acknowledged the measures announced in the mini-budget last week would take time to have an effect and sought to assure that the Chancellor was working “very, very closely” with Bank of England governor Andrew Bailey. 

“We are facing very difficult economic times. We are facing that on a global level,” she said. Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight.”

The Bank’s extraordinary intervention effectively saw it bail out the Government and came amid echoes of the 2008 financial crisis. It came after the value of some long-dated bonds had halved in value in recent days.

The gilts sell-off eased after the emergency action, while the pound has also steadied since Monday’s record plunge – standing at 1.08 US dollars thanks in part to the Bank’s move to signal that “significant” interest rate hikes may be on the way to calm sterling and tame inflation. 

But there are fears the pound may yet be heading towards parity with the dollar, with the Chancellor not planning to give more details on how tax cuts will be funded until his November fiscal event.

Former Bank governor Sir Mark Carney has also warned the Government’s measures have seen it work at “cross-purposes” with the central bank and under-cut the UK’s key economic institutions.

‘Once in a generation’ plans to transform Jersey’s Harbour – including replacing the ferry terminal – announced by Ports of Jersey

A ‘ONCE-in-a-generation’ programme of works to transform the harbours in St Helier is to be carried out by Ports of Jersey

The company says the regeneration will safeguard the long-term viability of the Harbour, serving both passengers and freight, improve the customer experience, and realise the area’s potential as a leisure, cultural and tourism destination.

The Master Plan will cover Elizabeth Harbour, New North Quay, Albert Pier, Victoria Pier and the Old Harbour. 

Ports intend to submit a planning application for the initial stage of the project, which involves redeveloping the Elizabeth Harbour to improve freight-handling capacity and replace the dated terminal building, before the end of this year. Work on the first phase could start in 2023 and is anticipated to last around three years.

It is also estimated that the plans for the scheme in its entirety – looking at further development on the New North Quay and regeneration of the Old, English and French harbours – will take between seven and ten years to come to fruition. 

Ports of Jersey will fund the project, although the organisation’s chief executive, Matt Thomas, said it was ‘too early’ to know what the cost might be. 

“The Harbour Master Plan is an opportunity to improve the resilience of our port infrastructure and to regenerate the heart of St Helier. It will enable us to continue to provide essential public services and undertake significant investment without requiring funding from taxpayers.”

“The Master Plan will take many years to be fully realised, so we have time to ensure that the detailed plans that we formulate in the years to come reflect the expectations of Islanders and preserve the distinctive character of the Harbour,” he added. 

The plan proposes to replace the Elizabeth Terminal building, which opened in 1989. This is the building used to board and depart Condor ferries. It is also proposed that the so-called lift-on lift-off ferry operation (for freight ships where cargo is lifted off using cranes) is moved from the New North Quay to Elizabeth Harbour to join the roll-on roll-off operation.

It is proposed that the existing LoLo crane operation will move from the New North Quay to Elizabeth Harbour to co-locate with the RoRo trailer operation. This will combine all freight handling facilities and free up space at New North Quay for further development. 

Options for this project will be developed once work on Elizabeth Harbour has begun. Ports will also look at options for how it can regenerate the Old, English and French harbours. 

The disused La Folie Inn will be renovated, in partnership with key stakeholders due to the building’s listed status. It is not clear exactly what it will be used for.

Condor to trial new electric ferry which can ‘fly above the water’

Condor is to operate a new electric ferry which can ‘fly above the water’ during a trial in Northern Ireland. Belfast-based Artemis Technologies has this week unveiled the design of its new EF-24 passenger vessel, which will carry up to 150 passengers, over a range of 100 nautical miles and with a top speed of 38 knots.

The new ship is powered by Artemis eFoiler® system, derived from the America’s Cup race series, which will enable it to fly above the water, producing a minimal wake at high-speed and using up to 90% less energy than some conventional ferries. 

Condor is a partner in the Belfast Maritime Consortium which is spearheading the project and the ferry company will operate a passenger service between Belfast and Bangor in two years’ time. It has previously said it was keen to explore the option of operating electric ferries across the Channel.

John Napton, Condor’s chief executive, said: “As an experienced, commercial operator, we are really pleased to see the progress made by the Artemis team in Belfast in developing this concept into an operational mode of transport.”

Condor and our shareholder, CTI, are looking to the future and this includes exploring ways of reducing our carbon emissions and finding more sustainable travel solutions. Vessels, such as the EF-24, perfectly provide the clean alternative to traditional ferries.’

The pilot scheme will see Condor run a 30-minute commuter passenger route between Belfast’s Titanic Quarter and Bangor Marina in 2024.

French fishermen fined for illegal fishing in Jersey waters

Two French fishermen who caught whelks in the Island’s territorial waters without a licence have been fined £3,000 each. Fishing-boat captain Sebastien Martin (43) and boat owner Eddy Blanchet (49) used whelk pots within Jersey’s waters during May and June this year – but claimed they did so by mistake.

A bitter dispute over how many French boats were granted licences by the Island post-Brexit resulted in vessels from Normandy and Brittany blockading St Helier Harbour last spring at the height of tensions, with the UK sending two naval vessels to the Island in response to the crisis. 

Both men pleaded guilty at the Magistrate’s Court yesterday to fishing in Jersey’s territorial waters without a licence but said they had not intended to break the rules.

Legal adviser, Sophie Lister, prosecuting, said that Jersey fisheries officers conducting a patrol had been alerted to the French vessel by their tracking system, and discovered whelk pots that belonged to it inside Jersey’s territorial waters. 

She said it was unknown how many hauls of whelks may have been collected by the boat, but that each one could have been worth around £200.

Senior fisheries officer David Mettram told the court that there had been confusion surrounding French fishing rights in Jersey’s waters since Britain left the EU, with a reciprocal agreement under the previous Granville Bay Treaty being replaced by the post-Brexit Trade and Economic Co-operation Agreement, which meant French vessels must demonstrate that they had fished in the Island’s waters for at least 11 days per year in recent years. 

Mr Mettram said: ‘The vessel did not demonstrate this, so it did not qualify for a licence.’

The French fishermen followed proceedings via an interpreter. Martin said: “It was an accident, it was a genuine mistake.” Blanchet added: ‘It wasn’t intentional.’ 

Magistrate Bridget Shaw accepted that they had co-operated with the authorities and had pleaded guilty at their first appearance, so said she was imposing lower fines than she could have done. She said: ‘It appears to me that this was carelessness rather than a deliberate act.’

British Airways not renewing service contract

At least 15 jobs are understood to be at risk at Jersey Airport after British Airways did not renew its contract with local ground handling agents Airline Services. 

The company has contacted staff in the past few days to warn them that their jobs are now ‘at risk of redundancy’, following the BA decision, which brings to an end a 26-year relationship with the airline.

Managing director Bob Wickings confirmed that they had been unsuccessful in their tender and would no longer be involved in ground handling for British Airways, with the result that all their staff had been put at risk of redundancy. 

He declined to say exactly how many were involved, adding that there were a number of zero-hour-contract staff in addition to those with permanent contracts.

“We are still reeling from the shock and putting things in place,” he said, adding that it was a ‘sad end’ to a relationship with British Airways, which began when the local company was established to take over in-house ground handling arrangements previously undertaken by the airline. 

“My thoughts are with the staff. Their commitment has been outstanding over the last 26 years. I am very upset, but that is business at the end of the day,” Mr Wickings said. 

He added that Airline Services would continue to have a presence at Jersey Airport but would not be involved in ground handling, something which would affect their relationship with CityFlyer and Aurigny. “We will have jobs for some of the staff”, he said.

One of those affected – who did not want to be named – described their employer as ‘a brilliant company’.

 “We are all very upset as we have given BA an amazing service over the years. Some of the staff have been working for more than 20 years. We are very sad,” they said. 

Airport Director Robin MacRae said: “As a result of the decision by British Airways to change their handling agent provider in Jersey, Ports of Jersey will be working closely with all parties involved and monitoring the transition process.” 

Where appropriate, we will offer our support to those organisations and staff that need it, as the impact of this decision by BA is fully understood.

No impact on passengers is expected, as rigorous standards are in place for every handling agent operating at the airport.’

Mixed Markets

London’s FTSE 100 is up 0.06%. European markets are also higher today with shares in France leading the region. The CAC 40 is up 0.57% while Germany’s DAX is up 0.37%.

Wall Street ended sharply lower yesterday with indexes as follows: S&P 500 -2.11%, Nasdaq -2.84%, Dow Jones -1.54%.

Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.33%, while the Nikkei 225 led the Shanghai Composite lower. They fell 1.83% and 0.55% respectively.