27 June 2016EMEA analysis

Guernsey is in a strong position post-Brexit, claims Guernsey Finance

Guernsey, the largest captive domicile in Europe, is well placed to ensure there is minimal impact on its trading relationships and will put in place any required alternative trading agreements, according to Guernsey Finance, motional agency for the island’s finance industry.

The body has stressed that the UK’s vote to leave the EU should not impacts Guernsey’s historic relationship with the UK, which predates its relationship with the EU.

As Guernsey is not a member of the EU and not part of the UK, under its Protocol 3 relationship with the EU, the island is part of the customs territory which allows for the free movement of goods.

According to Guernsey Finance, the promotional agency for the island’s finance industry internationally, Guernsey is treated as a third country and outside of the EU. Guernsey has negotiated market access, or equivalence, with the EU in a number of areas, including that of financial services.

The island’s long standing policy has been not to seek change to its formal relationship with the EU, according to Guernsey Finance.

“Guernsey was a third country to the EU before the vote, it remains a third country to the EU now, and, it will remain a third country and outside the EU when the UK eventually leaves the Union,” the agency said.

The majority of Guernsey's trade is through the UK and this trading relationship is not in question.

While the trading relationship between Guernsey and the UK is not in question, Guensey’s Protocol 3 relationship, which is shared with the other Channel Islands and the Isle of Man, will need to be replaced by new trade in goods arrangements when the UK leave the EU.

Gavin St Pier, Guernsey’s chief minister, said: "Following the UK decision to leave the EU in this referendum nothing will change overnight in the relationships Guernsey has with the EU, or the UK for that matter.

“I welcome the opportunity for debate in the States of Deliberation on how we will manage this transition to ensure Guernsey can remain the same. We will be monitoring the economic impact of this significant constitutional change for the UK and we will be engaging with business and with the Committee for Economic Development to understand this knock on effect to our economy."

Dominic Wheatley, chief executive of Guernsey Finance, added: "We note the decision of the people of the UK to leave the EU. This is a historic decision and indeed a historic day. However, although the decision is clear, we have yet to see how it will be implemented and the new world that will be formed in this process. We will be monitoring developments closely to assess the impact of this on Guernsey and the financial markets in which we operate.

"What is clear is that Guernsey is robust, innovative and responsive to its markets and the international business environment. These qualities will continue to ensure that those who come to Guernsey to undertake finance business will enjoy the same excellence of service, financial security and expertise of advice and governance as they already do.

"Guernsey will remain committed to its position at the forefront of global standards of regulation, tax cooperation and transparency, and AML. This position alongside the substance and expertise of our finance industries, and the commitment and professionalism of the Guernsey Financial Services Commission and our government make us very confident that we can adapt and succeed in this new world as it evolves."

In order to protect the island’s interests, a policy letter will be published shortly to seek a mandate from Guernsey’s elected politicians to negotiate with the UK.

The negotiations with the UK, according to Guernsey Finance, will aim to protect Guernsey's interest in the UK exit agreement with the EU, replace Protocol 3 in the new UK/EU relationship, safeguard the longstanding constitutional relationship with the UK and seek new opportunities as the UK establishes new trading relationships with the rest of the world.

Lyndon Trott, chairman of Guernsey Finance, who also serves as Guernsey’s deputy chief minister, said: "The most important part of our external relations has always been to protect and promote our economic interests.

“Whilst we have our own interests and a different relationship with the EU, the identify framework document we signed with the UK when I was Chief Minister provides a platform on which we can work together to position Guernsey when the UK leaves the EU, in order to replace Protocol 3 and to secure new trading relationships and access to markets.

“The trading relationships we have are of a wide strategic importance to our economic interests. This needs to be front and centre of the work we do in the coming months."