Posted: 02/07/2013
A report written by a leading economist has revealed that Jersey helps the United Kingdom generate around £2.3 billion in tax revenues each year and supports 180,000 British jobs.
The work, prepared by Mark Pragnell and a team from the respected independent firm, Capital Economics, was commissioned by Jersey Finance and seeks to provide the most comprehensive analysis to date of the relationship between Jersey's economy and that of the UK.
While much of the data concerns the impact of Jersey's international finance industry, the report is representative of the island's overall benefit to the UK across all sectors.
Other key findings include:
• £1 in every £20 of money invested by foreign individuals and companies in assets located in Britain reaches the UK via Jersey.
• Each year, Jersey banks send around £120 billion of their deposits to parent operations in the UK, representing 1.5% of the funding of the whole UK banking system.
• Two-fifths of all assets administered or managed across Jersey's financial and wealth management sectors come from markets outside the UK and EU.
The report also considers the issue of so-called ‘tax leakage' from the United Kingdom mediated through Jersey, concluding that:
• Losses to the UK Treasury through legal tax avoidance are estimated to be no higher than £480 million a year and are probably much less.
• No more than £150 million a year of British taxes could potentially be evaded using Jersey, but that recently approved information exchange agreements will substantially reduce or eliminate the potential for tax losses.
• Although some UK tax may leak through Jersey, the amounts are dwarfed by the estimated £2.3bn of taxes paid on British jobs and profits supported by Jersey.
Geoff Cook, CEO of Jersey Finance, said:
“This new work powerfully demonstrates the substantial contribution made by Jersey to the United Kingdom. We have always understood that our activity here in Jersey delivers a net benefit to the UK, but it is now clear from the data in this report that Jersey makes a substantial contribution to the British economy, facilitating huge amounts of foreign investment, providing billions in vital liquidity to the UK banking system and supporting many tens of thousands of jobs.
“In addition, the report demonstrates the truly international nature of Jersey's finance industry, with global capital flowing to the UK from some of the largest, and fastest growing, markets in the world.”
Senator Philip Ozouf, Treasury and Resources Minister, States of Jersey, said:
“This report powerfully illustrates the interdependent and mutually beneficial relationship between Jersey and the UK. In recent months we have taken significant steps to advance our shared agenda around zero tolerance of tax evasion and a commitment to transparency. This independent report goes further in quantifying also the benefit to the UK of a well-regulated offshore centre in bringing global investment to UK business, infrastructure and the City of London.”
Mark Pragnell of Capital Economics and principal author of the report, added:
“This work goes further than any previous study and, importantly, provides a comprehensive review of the sources and uses of assets administered or managed in Jersey. The island is a catalyst for employment and economic activity in the United Kingdom, which itself generates revenues for the British exchequer.”
The full report is available to the public via the Jersey Finance website and can be found at www.jerseyfinance.je/valuetobritain