New deal for the finance industry
Tuesday 2nd October 2012, 3:00PM BST.
Treasury Minister Philip Ozouf making the announcements yesterday
MORE than £1 million of public money is to be ploughed into securing the future of Jersey’s finance industry in the post-credit crunch financial world, ministers have announced.
Treasury Minister Philip Ozouf has authorised the transfer of £990,000 from States reserves to Jersey Finance, which will use it to employ a team of consultants to carry out research into all aspects of the industry.
The information will then be used to underpin a new States strategy for the sector headed by a new director of financial services – Joe Moynihan, who is currently head of AIB Jersey – whose appointment was announced yesterday.
Announcing the measures, Treasury Minister Philip Ozouf said that it was an essential project to ensure the future economic prosperity of the Island – and therefore safeguard jobs and public services – and keep it at the forefront of the financial services industry.
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£1 million for consultants!!!!
I despair ?!?
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So Senator Ozouf believes that chucking a load of money at consultants is going to help the island’s prosperity ? Heaven help us. Perhaps instead he should stimulate the economy by taking his boot off the throat of ‘ middle Jersey ‘.
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The majority of middle Jersey work in finance and rely heavily on the industry continuing at maximum capacity.
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I suspect that this will not affect the long term decline of the finance industry.
There are cheaper and hungrier jurisdictions out there and with the internet everywhere is next door.
Jersey has always relied on it’s traditional links to London and the UK in general but that was in the days of letter post and difficult international calls.
The game changers are email, Skype, etc, instant communication and almost free.
The finance industry is not going to collapse but a steady decline to around a third to a half of it’s present size is on the cards.
There will always be some business that Jersey will always be best for but the easy days are over.
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It won’t collapse but we’ll see many unemployed in the next few years and people will struggle with their mortgages (so house prices will fall. The problem is that roughly 300 Billion is hidden in Jerseys bank vaults:-) even money from Greece & Spain. The investors don’t have to tax their money & the banks themselves are only paying 10% tax. It’s now become even easier to hide money by creating a Trust but the biggest problem is job creation. Nobody is investing in people on this Island, sure you’ll always have a few people working in finance but the middle class will soon disappear and taxes will increase.
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I agree with all of that Pip
Anybody who thinks Jersey’s finance industry will remain unchanged are deluded. I suggest spending shedloads on consultants shows the States know the writing is on the wall
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Another report, more consultants…
Same all same all…
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So on top of all the tax advantages that the finance industry been blessed with more public money is given. We are all right to dispair.
Please remember at election time.
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Its just not transparent Gino.
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So Phil wants to pay out £1 million to some consultants in the hope that ‘they’ will make decisive recommendations to re-energise and protect Jersey financial sector. Gosh, it would seem Phil is all out of ideas – which is dissappointing – I suggest that Phil and his colleagues be brave and take on the responsibility, do the work and decide on the way forward themselves. In my experience, consultants are generally overpaid and on the whole not worth half what they are paid. And are prone to not making any difference and simply point out what is usually very obvious.
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It s a good way to cover his back if things go wrong. Or may be an excuse to go to Barbados the next time.
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nasty greedy people!
Well said Judge Jeffries,
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MORE than £1 million of public money is to be ploughed into securing the future of Jersey’s finance industry in the post-credit crunch financial world, ministers have announced.
Post credit crunch for who?Certainly not for me or many other members of the population who face uncertainty in their jobs,exorbitant taxes, ludicrous food and fuel bills and unaffordable housing,and yet our council of ministers still spend spend spend on the people who least deserve it,the banks whose greed has affectively buried us all, with total impunity.
They have appointed a man to head this up,and no doubt an expensive team of lackeys, that obviously did not do a wonderful job at AIb,because if he had they would not be closing his departments down, both here and in the Isle of Man , banks don’t shun profit.Anyway if we are spending a million pounds on consultants what will this bloke be doing exactly?
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This has desperation written all over it.
When are they going to be honest about the state of our economy for once?
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Good to see States spending being reined in as promised. Beyond satire. What are we paying Jersey Finance for if they haven’t got a clue what’s going on in the industry?
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Nobody ever said they knew what they were doing. Just chucking money at the old boys network!
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When will people realise that if the world of finance declines the impact on our island will be immense !
Huge unemployment, businesses going bust, suppliers going bust, the list is endless !
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When finance declines as it is doing slowly, the States need to plan for decline not keep fooling themselves everything is rosy.
And continuing allowing people to flock here and build up ability to claim welfare needs to be stopped.
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two words: Sack him!!!!
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Get Richard Murphy…….. he’d be a lot cheaper and has probably already said what needs to be said!
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No amount of money being chucked at consultants and wasted on yet another new, overpaid director will stop the gradual decline of the finance industry here or anywhere.
Banks are just like any other business in that to survive they need to cut costs. They will take whatever steps are necessary to do that and if Ozouf thinks that throwing money at the industry in the shape of highly paid directors and consultants will make a jot of difference, then he is as thick and deluded as they come.
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Calling in the consultants is a sure sign the finance industry is heading for the exit.
I remember the long decline of tourism and agriculture was punctuated by a long line of snake oil salesmen peddling their nostrums for huge fees, it made no difference.
Both industries faced huge structural problems that were beyond solution.
Competition from elsewhere where costs were lower and the industry bigger resulted in slow decline.
Finance is in a similar hole and any number of consultants are not going to dig it out.
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It looks to me like they are trying to shore up a losing position. This is the trouble with putting all your eggs in one basket, when it gets hit eggs get broken.
Finance is slowing pulling out of the island. I expect many more to loss their jobs in the coming years.
I would say that behind the scenes the government are pannicking.
I can offer advise for nothing this will be a waste of money. It would be better to spend it elsewhere.
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Does anyone know if the well respected Irish Banker is being paid out of the States budget or this money comes from the new, indirectly States financed , Jersey Finance one-off approval? If this is another States job with six figure salary and final salary pension P.O. should have the guts to say so.
So much for Geoff practicing what he preaches
http://www.thisisjersey.com/business/2012/09/15/keep-costs-low-or-lose-your-customers-finance-is-warned/#comment-189903
Was this job advertised ???
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What will yet another 1 million pounds spent on finance consultants tell us what we already know. Jersey threw everything into Finance and gave up on Tourism and Agriculture. When I arrived in Jersey over twenty years ago we had a balanced economy between all three industries but people of greed like Ozouf only wanted Finance and we are now were we are. Yes now Finance getting more public money. If I was Jersey I would rid yourselves of Finance and get back to to what you did best before greed arrived, agriculture and tourism.
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Yes Jersey was a much nicer place in the 60′s and 70′s when finance wasn’t the “b” all and end all. The quality of life has been plummeting since.
Time to move on to pastures new.
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One of our many big problems is the public sector wages bill £750 million per year (?)
Before finance this was not the case, in the boom times long gone the States went mad, many of these highly paid people are supervising the finance industry.
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We are told constantly we are a world leader in finance and at the top of our game, hmmmmm am I missing something here!
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Can Ozouf do this without COM approval?
If the money is earmarked for one department can he just assign it to another?
Will the budget be adjusted accordingly?
How much is being paid to these consultants? WHO are they?
Has due diligence been done on them?
Were the positions advertised for?
The guy from AIB – how did he get to know about it?
Is the man from AIB local?
Is the man from AIB qualified?
How much is he being paid?
How long for?
Why isn’t Jersey Finance paying for this?
Why doesn’t Jersey Finance know ALL ABOUT the industry?
If we are getting external consultants in and paying millions to individuals then why do we have a states department for this very purpose?
Please can someone from the COM ask these questions of Phil ‘The Spin’ Ozouf as I am getting the idea this is another Jobs for the Boys posting.
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The finance industry is far from dead. When interest rates begin to rise in 2 years time and rise they will…bank margins and profits will grow, as in turn will employment.
With so many unemployed at the current time, wouldn’t it be wiser to get as many of those people into work placements and the states offer to pay half their wages for 6 months/a year. This way, the unemployed get work experience, the states spend the million/s on being positive for once and we all benefit because there’s less people relying on benefits for the next 25 years. In theory!
Or you could just employ a team of 5 consultants from the uk, pay them £200 grand each and they tell us, finance is going through a tough time and we need to diversify into…online gaming possibly.
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Change the record Mario. It’s clear to most people why Jersey has most of the eggs in the finance industry and that’s because it generates the most income for the Island.
I hope you never run a business because your logic is flawed; if you had space in your shop to sell 100 widgets and widget A brought in 5 times more income than widget B with your business brains you’d still fill your shop 50% widget A and 50% widget B meaning you’d only ever achieve 60% yield of the total profit you could achieve if you had instead filled the shelf with widget A. Meanwhile the shop next door is enjoying near on 100% profit yield as all of his widget A’s fly off the shelf!
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And when people stop buying widget A….?
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And what would you do when your supply of product A starts to dry up due to other places taking a greater and greater number of them? Your supplier will service them first before bothering with your small order. It isn’t as if you have any other products to sell as you are hooked on product A.
At some point product B will be more profitable than product A. However you are still selling A regardless as the profit per item is higher even though your number of sales are now less than 20% of what you could have got from B.
A balanced economy is a must no, ifs, buts, or maybes. The CoM need to realise this and act before it is too late to rectify the situation.
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Think youll find with the state of the UK economy, increasing government debt (even with austerity) interest rates will be low for rather longer than the next 2 years.
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Very simple.
First thing you do is actively market widget A to maintain as near as possible to maximum capacity (I believe that’s what the £1m is for) because the investment is very small compared to the return.
At some point B COULD become more profitable than A, not WILL as your crystal ball has told you. At the moment B is no where near generating the profitability of A per unit or in total. Don’t panic Mr Mannering!
If you check Jersey’s GVA you’ll note that as of 2011 Finance is still producing 41%. The closest rival is Other Business Activities (or small medium enterprises at 9%. Retails lagging at 7% along with sacred agriculture, a pathetic 1% before subsidies. Finance also happens to employ the majority of the workforce and pays a much higher average salary meaning more tax receipts and more spend to prop up other industries like retail.
Furthermore finance receives some of the lowest subsidy of any industry. And it’s a fact the ROI is far far greater than any other industry.
In other words widget A will be more profitable for some time to come. No need to push the panic button yet!
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You don’t need a weather man to tell you its peeing down!
Another waste of money.
So Phil is admitting again he’s not well trained enough to do this job? Hence his need to call these people in.
Good scapegoat for him too, because he has somebody to blame when the sh1t hits the fan…………..”nothing to do with me, it was the advice from those consultants that was wrong!
Well played.
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We don’t need to spend £1m. We just need to get rid of the JFSC and BEG the Guernsey Financial Services Commission to regulate the Jersey industry.
Guernsey’s economy is out of recession: Jersey’s is mired. I’ve spoken to people at jersey Finance, law firms and fund administrators in the last 3 months and they all confirm we are losing work on a daily basis to Guernsey.
It doesn’t cost £1m to find this out. Spend it on getting rid of all the deadwood from the JFSC and getting in people who understand the finance industry and who understand risk.
Job done.
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This money would be better spent ensuring we have a reliable power supply in the near future as without this in place Jersey cannot be at the forefront of either the Finance Industry or within the I.T.field. Without reliable power sources and systems in place the future of both of these industries is extremely vulnerable.
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I doubt interest rates will rise.
Every Western government is carrying massive debt, a rise in interest rates would make that burden unsupportable.
The housing market is also very fragile with static or falling prices almost everywhere.
So do not imagine that a rise in interest rates will come along and save the banks.
I suspect that we will be in a world of low interest rates for some time, maybe a decade.
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#26 Pip
If you print money in the way which all these countries have, especially the UK. You will inevitably have huge inflation in the coming years, it’s a clear economic fact. Hence the gauranteed rise in interest rates.
5 years from now, interest rates in the uk will be at 6% +. Just watch this space.
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#27 Jambo
I have my doubts that this is a clear economic fact.
Economics is not a science and economies have a nasty habit of doing what economists do not expect them to do.
Counterbalancing the quantitative easing is the huge deficit reduction programmes that will suck money out of the world economy plus high unemployment, static wages and house prices.
Governments wil be keen to cotrol inflation but a few percent per annum over a decade will reduce liabilities and maybe help restart the economy so maybe they will not try and control it as hard as you might think.
We will see.
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Pip,
The price of gold tells it all. Double digit inflation is in the system and will hit by 2016-2020 – look at the prices of food, heating, transport. We are in the midst of a huge devaluation of money.
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