MPs ignoring the referendum result ‘is best for Guernsey’
MPs RENEGING on the Brexit referendum could be the best outcome for Guernsey, according to an economist.
Savvas Savouri, chief economist and partner of Toscafund Asset Management LLP, which has $4bn of assets under management, said that a no-deal with the European Union, a ‘peaceful’ deal or no Brexit at all were possible.
As to the ‘best’ outcome for Guernsey, he said: ‘You could not fail to benefit from a reneging on the referendum because three things would happen. The pound would go down, nothing would really change because nobody is leaving the European Union. So your status quo is continuing but you’re more affordable and more competitive.
‘Thirdly, you benefit from the uncertainty and chaos that reigns on the mainland – to attract not simply mainland human financial capital but also capital looking to come.’
It was ‘fantastic’ that Guernsey was in the same time zone as the UK, was English-speaking, was not far from the UK and used sterling, said Dr Savvas who spoke at a special Brexit event organised by the GTA University Centre at St Pierre Park Hotel.
‘The best outcome for the Channel Islands is the worst outcome for the mainland. But to repeat the most likely outcome, and I’m certain of this, is an 11th hour deal.’
Referring to MPs’ rejection of Theresa May’s Brexit deal with the EU, he said: ‘Now the size of the defeat that May suffered was actually in her favour because it was so large.
‘It was so cross-party that she can now go to Brussels and say: “It wasn’t a narrow defeat, it wasn’t a few oddballs who voted against my deal it was the entire political base”.’
Dr Savvas said that a no deal was not in the EU’s interests because it would drive the value of the pound down – with negative knock-on effects to member state economies.
Half of pensions in the Republic of Ireland had sterling pensions, while 50% of tourists to Cyprus and Malta came from Britain. One-third of working age Lithuanians had UK national insurance numbers and were earning in sterling before sending it to their home country.
Dr Savvas said all these countries relied on the pound being relatively strong, while a weak sterling could do ‘wonders’ for sectors such as exports and tourism for the UK. ‘A fall in the pound would have a direct impact on economies around Europe. So it’s not in the EU’s interests for a no deal.
A host of European companies had also invested heavily in UK so turmoil could hit their bottom lines, he added.
Dominic Wheatley, chief executive at promotional agency Guernsey Finance, also spoke at the same event.
‘I don’t think any of us here in the Channel Islands generally or the Crown Dependencies or any other part of the British family would want to be benefitting from the discomfort that a no-deal would bring about for the UK,’ he said.
‘I think there would some mixed blessings in that, if indeed they would all be blessings, because of course the UK is our major market. Anything that harms the UK economy ultimately will probably get us sneezing a bit.’
