Finance profits hit
Thursday 1st July 2010, 3:00PM BST.
Treasury Minister Philip Ozouf
FINANCE industry profits halved last year to their lowest level since records began, according to official figures released today.
The Island’s biggest industry saw profits fall from more than £1.5 billion in 2008 to £809 million last year. The profit per employee dropped from £123,000 in 2008 to £68,000 in 2009 – also a record low.
But the good news was that the industry spent more money in the local economy than it did in the previous year. The varying industry sectors parted with £380 million buying goods and services in Jersey, which represented 56 per cent of their spending. The figure 12 months earlier was £350 million.
Treasury Minister Philip Ozouf said he was buoyed by those figures and said it was encouraging that when profits were so sharply down, spending in the local economy was up by more than inflation.
Read the full story in the Jersey Evening Post. Click here for subscription details. Individual editions are also available online.
Travel
To, from and around the Island
Airport Arrivals & Departures
Harbours Arrivals & Departures
Bus Information & Timetables
JOIN US ON...
Facebook and Twitter
Follow us on Facebook
Follow us on Twitter
Got a story? Get in touch
BIRD WATCH 2012
Click here to record your results
The 11th Great Garden Bird Watch took place over the weekend, Saturday 4 and Sunday 5 February. JEP readers were asked to get on board to help monitor bird life in the Island.
This is Jersey
Jersey Evening Post
Useful links
It is not surprising that the finance industry in Jersey is having problems. That has mostly been caused by the low interest rates that were inflicted on us by Incapability Brown.
Sadly their present government also wants to keep the rates down.
There is less incentive for people outside Jersey to want to invest here so we will have to go back to farming and tourism if those industries have not completely vanished.
Eventually there will be rules made by the European Federation that will make it even less attractive for their citizens to invest here. The only good to come of that will be a considerable reduction in the population of this overcrowded island.
Report abuse
Public sector workers take note! This is what pays the bills and why we cannot carry on spending as we are at the moment.
Report abuse
Islander, would you have preferred interest rates were not slashed and the banks imploded causing a worldwide depression where we would all be living in caves. You can blame New Labour and Gordon Brown for a lot in terms of how they damaged the UK economy but that slashing of interest rates (actually by an independent Bank of England monetary committee) was as necessary a move as they come.
Report abuse
We screwed up, so let’s tip the locals upside down and empty their pockets. No let’s introduce Capital gains tax and and corporation tax..let those with the big bucks who get the most benefits start paying their dues,let us stop featherbedding the wealthy and the companies who should be made to pay…and Pleeease do not come back with You’ll scare them away..as the world gets more hostile we become even more desirable..”They’re not going anywhere….
Report abuse
I’m not sure how Mr Osouf can be encouraged by these results.
Jersey’s over stretched position in the financial sector should no longer be taken for granted. Cayman has a similar high cost environment and is also struggling.
Think of industries, manufacturing, call centres that are heading to developing countries in order to minimise overheads and maximise profit. Banking, funds and trust is no exception. Keep your eyes on Mauritius, where there is massive investment in construction – new airport, offices, hotels and banks. Doesn’t sound like Jersey does it?
The only investment that appears to be taking place in Jersey, is our beloved Dandara who is flooding the Jersey market with shabby apartments under the approving eye of our clueless Government.
Report abuse
Place your bets for next week’s headline: “Strategic Reserve to be used to stimulate the finance industry….” the States are keeping developers’ profits healthy with taxpayers’ money, why not the banks?
When you have a good year, save. When you have a bad year – use your own safety net. Households have to do this but businesses think short-term and complain when the tide inevitably turns.
Report abuse
Public sector workers take note! This is what pays the bills and why we cannot carry on spending as we are at the moment.
All sectors please take note. Read the next item on increased suicide. We do not need more UK consultants to tell us why..this happens during economic down turns.
So lets slash the health budget, esp Mental Health and have some more suicides.
This is about reduction in Profits, not net losses.
Have you seen the bonuses slashed ! No. let the public pay for the mistakes of the bankers, again.
Report abuse
Let me just point out what the public sector have to compete with.
In the JEP tonight the average salaries and bonuses were published
Banker £53,000 + £6,200 bonus
Fund Manager £68,000 + £13,600 bonus
Trust and Company £55,000 + £3,900 bonus
Legal £51,000 + £1,800 bonus
Accountancy £42,000 + £1,300.
This does not include the private health care they get, Christmas parties etc and some even get their children’s private School fees paid for.
I am not a Police Officer but I do work in the emergency services.
All the people in the emergency services are grossly underpaid in comparison. We save lives finance makes rich people richer. What is more important!!! (True its not required but most do have at least A levels, and years of training)
Report abuse
Oh and tricky #2
Public sector workers take note!
Public sector workers have been taking pay cuts in relative terms for at least the last 10 years with below cost of living pay increments while those in the PRIVATE sector have bee doing very nicely.
Welcome to our world!
Report abuse
Headache – your’re right. Ozouf is in superspin mode again. He just can’t help it ! Jersey is in trouble without a doubt. The other story in today’s JEP was that in 2009 there was a 6% fall in holidaymakers and 17% decrease in business visitors ( video conferencing is much cheaper ). This is our second largest industry. Total loss to Jersey : £13 million. As all this will lead to more unemployment can someone please please tell me who is going to live in all these many hundreds of houses / flat that are being built at an alarming rate. Even if they lowered the housing quallies to 5 years one must work to live here. The finance industry growth has reached its peak and the party is over ! Tourism will not recover for a long time to come. Fisheries are struggling and fields are lating empty. What do developers know what we don’t ?
Report abuse
6 J. you have greater faith than I that it is indeed still intact….I reckon it’s been spent.
Report abuse
Truthseeker – you’ll scare the away…..
Headline “Finance Industry to pull out of Jersey – completely” er…now what?
Report abuse
Interest rates will go back up again. It might take until the close of 2011 or 2012 but they will rise. In the interim period most of the Finance companies on the island (particularly the divisions of the banking industry) will deliver lower annual profit figures.
But don’t think that this is the whole story.
Most have parent companies in the UK need the liquidity (from savings & investment income generated by their offshore divisions)to fund lending (mortgages, personal loans, business loans etc. The margins that they are currently making on these loans has increased considerably. Plus these days they are much more wary of bad debt so the quality of new business is much higher.
So whilst the savings side of their businesses is not making the same levels of profits of two years ago, the lending part are making hay.
Trust me, the parent banking companies, in the UK, will be announcing bumper profits next year.
Report abuse
Jon-
Firstly the wages outlined are not typical of the average finance worker by any means..we wish
secondly pay rises even below inflation what are they!!
Go home at five..don’t think so, thats half way through the afternoon, you try getting hold of a states depatment at 6 pm when many finance workers are still hard at it!
Finally the small matter of job security or jobs for life as it is better known in the public sector. Just recall how many finance workers have lost their jobs recently. 70 applicants per job advertised at the moment with some ex finance workers out of a job for over 12 months. Still want to join us.. thought not!
Report abuse
Jersey’s problems are much much much worse than the Finance Minister admits to.
The zero ten tax policy means that most finance co’s now pay tax at 10% rather than 20%. As profits have more or less halfed, the tax take will fall by 75% (from £300million to £80million.
I really hope the Finance Minister has allowed for this when calculating the level of spending cuts and tax increases!
Report abuse
J (6) Place your bets for next week’s headline: “Strategic Reserve to be used to stimulate the finance industry…
Sorry J it was today’s headline (1 Jul 10), it is already history
http://www.thisisjersey.com/2010/07/01/cash-boost-for-jersey-finance/
Report abuse
It is ironic that the people who do not want to support the finance industry are also those who do not want GST to rise.
If we don’t support our only profitable industry, how exactly do you think schools and hospitals will be paid for?
Oh yes, I know – the money tree! Always the same answer.
Report abuse
There we go – a sure sign of the fact that Jersey cannot solely rely on the financial industry to keep the island in the comfort zone. Now, who is responsible for the decline in tourism and the income received from it?? And for turning all the many hotels into permanent flats?? We need more tourists and we need to ensure the island is not solely reliant on finance so the states don’t have to keep bailing out what we have left of the tourism industry.
Report abuse
Surely there will be one good thing to come out of this – houses will become more affordable?!
If firms are struggling, unemployment will increase, meaning those who moved here during the good times and who do not have ties to Jersey will move away meaning there will be a massive over-supply of houses and hence prices will decrease and an alarming rate?
Now I’m no expert but I would expect this to happen now that everyone knows Jersey has hit the buffers!
Anyone in the know agree?
Report abuse
“We need more tourists and we need to ensure the island is not solely reliant on finance”
If only the weather wasn’t guaranteed in Spain.
If only people were no longer scared of abroad.
If only people didn’t want to explore different cultures.
If only there weren’t so many regional airports flying people to places they hadn’t heard of a generation ago.
Supporting tourism is throwing good money after bad.
“Surely there will be one good thing to come out of this – houses will become more affordable?!”
Only if your wages stay the same. Without finance the economy would shrink by 70-80% – would you even have a job?
Look at the UK: wealthy peeps will be looking to relocate away from high tax high crime economies. If finance tails off, wealthy retirees will be needed and will come in droves. Anyone who can pay £100k a year in tax will be allowed to live here. Called Plan B.
Report abuse
Don’t worry about it, interest rates and therefore margins are only going to go up!
Report abuse
Jon (8) Those overpaid banker you are complaining about pay your wages. Even if you pay the full 20% tax rate (which you probably don’t) 80% of your salary still represents a cost to the public purse. For you to earn more money, those bankers (and everybody else in the private sector) would either have to pay more taxes or earn more money. that is the problem with the Jersey economy, we have too many people in the public sector demanding more money and none of them seem to have a clue where that money comes from. The one basket that Jersey chose to have all of its eggs in is now in serious trouble. The finance industry still pays 10% corporate tax and this fall in profits equates to a tax shortfall of approximately £80 million for 2009 from this sector alone! Combine that with a 6% fall in tourism for 2009 and even an idiot (apart from Ozouf and Le Sueur) can see that the Island economy is in trouble. Indications are that 2010 will not be much better. So Jon, if you think you are worth more money, try stepping out into the real world and find out what your real value is. Otherwise, settle for a pay freeze and be grateful you still have a job.
Report abuse
#18 ‘If we don’t support our only profitable industry, how exactly do you think schools and hospitals will be paid for?’
. Introduce a high rate income tax band but somewhat lower than that imposed by the UK, EU, etc.
We would soon see who really wants to live on an attractive island rather than enduring an existence on a boring ‘rock’ merely for the love of Mammon.
There are thousands of contented, comfortably off people on the mainland who would love to live in Jersey, bringing their not inconsiderable wealth with them. Many might also be reasonably well behaved low liabilty assets to the community.
Their lifestyles would need servicing, so plenty of work for most of the existing trades – including the legal profession when the finance related work dries up!
Because it is/was attractive, the Island is highly unlikely ever to become the ghost town predicted by some scare mongers. On the other hand the more it becomes over crowded, over developed with all the beauty spots lost to building, quarrying or motor sport, the less the appeal for the above group.
Nevertheless, I suppose it takes all sorts, some actually enjoy living cheek by jowl in places like Hong Kong. If it gets like that I’ll move to Alderney!
Report abuse
16 Bridget..you are so deluded it is breathtaking.
Report abuse
12 SE …Dream on
Report abuse
Interest rates are unlikely to rise much in the short term eg a year or two and will rise only slowly in the next five years.
UK growth is slow and unlikely to pick up much, there is not much chance of inflation rising by a big margin, the government can sell bonds easily and the pound is strongish so the Bank will keep interest rates low.
The island is full of finance professionals, maybe one of them could give some resons why interest rates should rise
Report abuse
Comment 16 Bridget
Thanks for making me laugh so much you should consider taking up writing comedy scripts thanks again I really did enjoy your joke, have a nice weekend
Report abuse
#1 Islander, where did you get your information for that one? Do you really want to know what would have happened if the Bank of England hadn’t kept interest low?
#23 You pay his wages, he saves your life! Sounds perfectly fair to me. We all know there are public sectors areas that Jon is not within where money is being wasted, but I doubt it’s Jon’s fault or any of the ordinary public sector workers’ fault for that matter. Blame the Government. Divide and conquer seems to be their aim (between public and private) don’t let them win on this one! Public and private sector workers need to unite for what is best for the island not fight each other claiming stuff they actually cannot be 100% sure about unless they have done each other’s jobs for a good number of years!
#16 Bridget, I look forward to seeing you on Mock The Week
Report abuse
JON let me assure you i don’t know where the JEP obtained those figures but they are very misleading i can assure that they are the top end figures and the majority of people in finance don’t get those salaries and only the ones that work for the big companies receive bonuses and pensions. I have not had a pay rise in three years let alone a ‘less than costs of living pay raise’ and a lot people in Finance not only work unpaid over time but give up a lot of their own time to study and go to night school to get qualifications and a better job not as in the states you get promoted to do the same job as you were before but given a different title and a lot more money. Also 450 people lost their jobs in finance in 2009 but of course that doesn’t headlines so doesn’t appear in the Media as with Woolworths etc.
Report abuse
Truthseeker – what would have instead of the Finance industry in Jersey – ship building? you seem a little deluded
Report abuse
The finance industry in Jersey will not disppear but I would hazard a guess that it will get smaller and more specialised.
There are plenty of places that are a lot cheaper and are looking at getting in to the game.
The fact is that the forces of cut throat competion within the global economy that have moved almost all computer manufacture and more to China have not touched finance yet.
Also despite a lot of talk from the States and Jersey Telecom we are gradually being marginalised in terms of the Internet.
Report abuse
Seems I have struck a cord!!!
The figures quoted came from page two JEP Thursday 1st July 2010.
They are reported to be average earnings and not higher earnings. Are you saying that the JEP mislead the public of Jersey….. Surely Not!!!!!
I have lived in Jersey all my life and have family working in the finance industry. They did not have the educational qualifications I have yet they earn £20,000 anually more than I do before bonuses and they don’t put the hours in that I do.
I am not saying I want a job in the finance industry. I enjoy my job!!!! I was merely pointing out what the public sector has to compete with, and yes we too would like to be able to afford to buy a house on this Island.
Report abuse
‘Truthseeker – what would have instead of the Finance industry in Jersey – ship building? you seem a little deluded’
Looking at the current world situation and developments it is likely that the finance industry will shrink in the island.
I have written about this issue before and I have never received a reasoned rejection of my thesis despite the fact that Jersey has more highly qualified finance professionals per vergee than anywhere else in the world!
So, go on with you, why should Jersey thrive as a finance centre while others decline or fail to advance?
Answers on a post card to Geoff Cook, Phillip Ozouf and Alan McLean as they cannot currently offer any reason at all.
Report abuse
Am I dreaming or didn’t Guernsey just announce a £50 million revenue bonanza from online gambling?
Report abuse
Excellent comment about finance workers here from another discussion on this site:
Firstly, you don’t particularly need to be qualified to work in the Finance industry – I personally work in banking and have done for nearly 8 years. I left school a month before my 15th birthday and have no qualifications other than my ECDL which I took primarily to get into a Finance job – anyone can do the same.
Very interesting. No quals and anyone can do it. Thought so! Some of us have choices and options and would rather do a worthwhile job! Everyone I know in finance hates their job and only do it because the moneys so good!
Report abuse
“So, go on with you, why should Jersey thrive as a finance centre while others decline or fail to advance?”
No reason at all Pip. So what do you suggest we do? Accept our only meaningful industry may struggle in future but try to make the most out of it while it is profitable or give up and all become labourers.
Come on. You think you’re so clever because you have a downer on finance. But what is your practical suggestion for what Jersey should do instead?
Report abuse
Jon et al, that is the probably with using ‘average’ earnings as a benchmark – Those earning high 6/7 figure salaries who can afford the taxes etc are dragging the lower paid into the tax trap as well by grossly distorting the averages.
I work in the finance industry and have done for many years. Salary £40k – last pay rise 2002 – Last bonust 2005 (£750.00).. Wife and three kids.
But i enjoy my job. Can’t afford any more tax rises – all funds coming in go on mortgage, food and living expensives – interest rates go up – I’m screwed. Tax Rises – I’m screwed. Food rises – I’m screwed. I earn £40k – thats good money, BUT i am on the breadline, The states need to stop hding behind statistics and spin!
Most of all I am honest, I will not sponge nor steal. But I am leaving the island. Good riddance.
Report abuse
Truthseeker – remember most Jersey people work in the finance industry.
Report abuse
#36 Not wishing to speak for Pip, but I think she would be correct in saying that this is for the States to be getting their heads around. Nothing lasts forever, and whether the finance industry lasts another 20 or 50 years it will go one day, that’s just life. We need States people who realise this and try to plan for these times not those who bury their heads in the sand.
Governments are fundamentally flawed because they are restricted in how long they can be in power, so they don’t have to plan much for the future. Society does though!
#35 I never thought you did have to be that intelligent or educated, although I’m sure there are some specific areas within the industry that require highly educated people (mathematicians etc). Mind you, if you can do it straight from school then why are people being brought in rather than sticking with their agreement to train up a local? I do think many people distinguish between banking and finance though, it is extremely easy to get a job in a bank straight from school as a cashier (for instance), but other parts of the finance industry will at least require a basic degree or professional qualifications. Also, why shouldn’t we give our young people more choice? Pretty rubbish of us to say “it’s finance or you can move away”.
Anyway, having a finance industry does not stop you looking at other industries.
Report abuse
I don’t hate my job, gross generalisation there #35 A. I earn decent salary and enjoy it because it is easy. Have an MBA along with accounting and finance qualifications. It is relatively easy way to have a good lifestyle, working 9-5 Mon-Fri is the busiest week I will have. Usually leave around half four after finishing my work early, and have between one hour and one and a hlaf hours for lunches – usually again paid for by company when out with clients.
Can’t see what there is to hate personally. It is also rewarding, making people money and providing for peoples families financial security. Jersey provides a crucial service in this respect, ensuring that financial security is not whittled away by younger generations of a family.
I fully support this, and Jersey benefits considerably from it. Look at the number of good cars driven around the island…. and the fact we don’t have begging on our streets.
A poor person in Jersey is someone with only one plasma TV and an old car (slightly tongue in cheek), but point is compared to the poor onthe mainland, Jersey is doing very well.
Report abuse
Thank you for some truths no.36! Everywhere else on this site people are saying how badly paid they are and how many long hours they work in finance. Meals out to lunch, paid for, sounds great to me- I am just a lowly essential services public sector worker. We are not worthy of any benefits. I am pleased you enjoy your job, I am being truthful when I say that I only know of 1 person who enjoys her work in finance. I suppose there will be a few.
Leah, I agree that there should but there are not many options given to school leavers- just look at what the careers supplement in the JEP shows you! Magazines and films too, alll about working in offices!
Report abuse
A –
I enjoy my job in Finance. As you are all aware I am a very smart guy. My salary is in line with my intelligence and ability – well into six figures.
I earn a big salary because I have a big brain – simple as.
Tends to be the way of things – always has been always will be.
Report abuse
#42
Thanks for the giggle.
Report abuse
42, Gods Mentor.
You forgot to mention your modesty.
Report abuse
I am not sure what aspect of his big brain God’s Mentor is trying to demonstrate by commenting here but my English teacher would have quickly pointed out to him that stringing ungrammatical part sentences together with hyphens would be a certain way to get a U at O level in his subject and attract substantial penalties in others.
I was trying to point out in post #33 that nothing lasts forever, the only certain thing is that things will change. It may be quick or slow but one day Jersey will have to do without a finance industry of the present size, just like the fact that one day there will be a post oil age.
It is the job of government to plan for the future, not stick it’s head in the sand and pretend that it will not occur!
By the way, Pip is a common Jersey abbreviation for Phillip and I was definitely a he the last tine I looked
Report abuse