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Searching for consistency in a climate of uncertainty

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Searching for consistency in a climate of uncertainty

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Unpredictable politics make it hard for businesses to plan their financial strategies, writes Richard Le Tocq

Recent years have been defined by uncertainty and instability across the western world. In the UK, Brexit has greatly contributed to this current state of unease, with both the EU and Theresa May’s government struggling to assuage the situation.

More broadly, European economies have been sluggish in recent years, with public finances impacted by high levels of public debt and unsustainable deficits. The political situation is also cause for concern, with populist anti-establishment figures close to power in many national and regional governments.

Whereas the major jurisdictions of the western hemisphere used to be regarded as stable markets, untenable public finances and unpredictable politics have made it increasingly difficult for businesses to plan their financial strategies. Nowhere has this been more the case than post-Brexit Britain. While the prospect of heavy tax rises should certainly be of concern to the private sector, businesses should also be wary of the political unrest that often accompanies periods such as these.

As a result, businesses are looking to locate to smaller, stable jurisdictions that are able to provide the positive business climate vital to their continued growth and success. It is on this stage that smaller jurisdictions are coming into their own, Guernsey being a case in point. With a prudently managed economy, no public debt, a long history of stable government, and a strong credit rating from Standard & Poor’s, Guernsey stands in stark contrast to its far larger neighbours.

In the broadest possible sense, the private sector prospers in stable and business-friendly climates, and thrives in jurisdictions which can enhance their competitiveness. Indeed, Guernsey’s stable legal, political, and regulatory environment has proved vital in appealing to businesses it describes as ‘high value and low footprint’. When selecting a jurisdiction from which to operate, businesses search for jurisdictions that are strong institutionally and have well-functioning legal systems, but that also possess reliable public policies. Executives look for stable institutions that undertake strategies aimed at maintaining stability and boosting investment.

Guernsey is the perfect example of how businesses do not have to be weighed down by uncertainty. As large countries face crises on many levels, smaller jurisdictions can provide refuge from these problems, while maintaining the benefits typically associated with major developed economies. Relocating to small and stable jurisdictions, such as Guernsey, enables companies to concentrate on what they do best, unhindered by the political and economic matters currently faced by larger nations. As large jurisdictions fail to meet the needs of businesses, we should expect firms to look to smaller jurisdictions for consistency and stability in the future.

Richard Le Tocq is head of Locate Guernsey

@LocateGuernsey www.locateguernsey.com

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