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So the people of the U.K. who turned up at the polls declared by a small but not insignificant margin that they would like to exit the EU. There’s been little analysis of the potential impact of this result for Guernsey in the run-up to vote for one simple reason: it’s impossible to tell.
That’s the problem with this result – those voting leave are not voting for a substantial package of agreements and treaties which will need to take the place of the EU for Britain. They have voted for an ideal which is just a very small part of the bigger picture. A picture which now needs to be drawn with the rest of the world.
Guernsey, a small, well regulated centre of excellence for finance is not part of the UK and not part of the EU. The relationship with the EU is a complicated one, governed by protocol three and as a “third country”. Effectively, Guernsey can trade with the EU freely without being a member. This is on the back of its status as a crown dependency of Great Britain.
Now the work is underway. As the UK negotiates its exit of the EU, Guernsey should work with the other crown dependencies to ensure its needs are met.
But what seems like a potentially painful and troublesome process also presents opportunities. Guernsey is often viewed as a tax haven, or low-tax jurisdiction and is subject to regular media dirty-linen-washing. Guernsey could come out of this process with an improved image. In fact, the Guernsey financial economy has been shown to contribute significantly to the UK and it is in Britain’s best interest to ensure the continued prosperity of this little island.
The immediate impacts of this vote will become clear in the coming days. The stock market slump has come as expected, and is unlikely to pick up during early trading. The markets fully expected a remain vote – the markets do not like uncertainty. Also the free movement of people around the EU is unlikely to be stopped immediately. However, the need for visas to travel around Europe in future may not be too far away.
France’s comments on the potential UK exit have indicated that this could well be an unpleasant process of negotiating the withdrawal. And whilst the UK contributes economically more to the EU than it takes out (net imports) there is unlikely to be a political desire to significantly change the current trade arrangements.
In Guernsey our politicians will have this issue dominate their term. With so much uncertainty as to the future trade and political relationship there is much to do. But in these early days it is very much business as usual.