EVEN though the global recession has failed to bring Jersey to its knees economically speaking, it has most certainly made a major impact on Island life.

Its effects have been serious enough to prompt redundancies, to kill the growth which it was anticipated would help to address budgetary deficits and to depress economic activity in all manner of sectors.

The root cause of the recession can be traced to the sub-prime mortgage catastrophe which originated in the USA, though other forces came into play as confidence fell internationally. However, many people have formed the opinion that all bankers and other finance specialists should be tarred with the same brush and are therefore jointly responsible for the worldwide downturn.

Some Islanders might even have been tempted to include our own finance professionals among the villains, even though the Jersey industry has been a victim of the recession rather than a significant part of the problem which initiated it. It cannot be blamed for the particular economic difficulties currently faced by the States. The zero-ten tax regime might be a major adverse factor, but no one would suggest that finance asked for it to be imposed.

Against this background, data published today suggests that we might soon see finance as a hero rather than any sort of villain. Through improved performance and improving forecasts, it appears to be playing a leading role in lifting the Island out of recession – having, we might note, been the first sector to suffer problems.

Unfortunately, new levels of confidence among financial institutions do not appear to be mirrored in the high street and the Island as a whole is clearly not yet out of the woods.
But these are early days. As by far the major player in the Island economy, finance was always likely to be the front-runner in any recovery. Also, with its finger on the pulse of world markets, it was always going to be best placed to respond to encouraging signals from outside the Island.

Encouragingly, it is probable that a return to normality in finance will rapidly be followed by knock-on effects in the wider economy. There are certainly dangers in our overwhelming reliance on financial services, but we should nevertheless be grateful that the sector acts not only as the foundation of our prosperity but is also capable of being the principal engine of resurgence in these difficult times.