Overview
Our interview comes against a backdrop of Labour's historic election victory in July – inflicting the worst defeat on the Conservatives in modern history. The new government now faces the formidable task of guiding the nation through a period of economic uncertainty. Sir Keir Starmer has inherited an economy hallmarked by sluggish GDP growth and high interest rates.
Britain's financial sector now faces the dual pressures of inflationary concerns and Brexit-related adjustments. The loss of EU passporting rights has been damaging, with 24 firms publicly declaring their intention to transfer just over £1.3 trillion in assets from the UK to the EU.
Amidst these disruptions, Guernsey has shown an impressive ability to adapt. The island’s regulatory equivalence with the EU, combined with its stable, well-established environment for cross-border transactions, has positioned the offshore finance centre as a valuable bridge for capital flows between the UK and Europe.
Our message is simple: approach us with an open mind. Don’t come with preconceptions. Let us demonstrate what we can do for the UK.
The new government acknowledges the critical importance of attracting foreign direct investment. Consequently, Guernsey is well placed to strengthen its position as a valuable economic partner. As Britain seeks to reassert its financial influence globally, Guernsey’s role in channelling investment into the UK, supporting infrastructure projects, and advancing sustainability goals is more crucial than ever. The crucial question remains, however, whether the new government will recognise this role.
Interview: Rupert Pleasant, Chief Executive of Guernsey Finance
We begin our interview by discussing how Guernsey’s financial services sector adds value to the UK. Pleasant highlights the significance of the recent Frontier Economics report commissioned by Guernsey Finance.
“Our aim in commissioning this report was to gather firm data to present to the new government demonstrating Guernsey’s role as a key contributor to the UK’s economy”, he says.
The report reveals that £57 billion of capital has flowed through Guernsey and is currently invested in the UK. “To put this into context”, he explains, “it’s almost three times the perceived financial gap Rachel Reeves says Labour has inherited. Had this money gone through another international financial centre, at least £13 billion would have never returned to the UK.”
“The report also shows that Guernsey generates £7 billion of investor returns to the UK. Much of that will be tax take for the Chancellor.”
Highlighting the social benefits accrued by the UK, Pleasant notes that Guernsey generates £4 billion in social returns. “This supports infrastructure, particularly social infrastructure, and also contributes to the UK's net-zero goals,” he adds.
He reflects on King Charles’ recent visit, where His Majesty requested demonstrations of how Guernsey’s financial contributions are being utilised in the UK. “We highlighted two Guernsey-domiciled fund strategies as examples”, he says. “The first was the NextEnergy Solar Fund, which operates more than 90 solar assets across the UK, powering nearly 900,000 homes and saving over 700,000 tonnes of CO2 annually. The second was Gresham House's British Sustainable Infrastructure Fund strategy, a major economic contributor with projects nationwide. King Charles was particularly fascinated by their vertical farming initiative which produces high-quality crops in minimal space using sustainable methods, boosting the UK economy while advancing net-zero goals.”
Guernsey’s financial offer
We ask what distinctive capabilities Guernsey possesses that maintains its attractiveness in a competitive environment. Pleasant argues a key strength of Guernsey is its robust, pragmatic regulatory framework which enables the region to lead in areas like sustainability.
He also says cost efficiency, speed to market, and market accessibility are other key unique selling points: “Our competitive pricing gives new companies an edge, where initial fees are critical, and reduced red tape allows businesses to get to market faster—vital for first-time managers and professionals”, he says.
“Additionally, Brexit has not negatively impacted us. Guernsey maintains equivalence with Europe, positioning us as a conduit for UK-based managers accessing Europe and vice versa. Beyond Europe, we facilitate around £47 billion in capital flows between North America and the UK, and over £70 billion between Europe and North America.”
He explains that this is largely attributed to Guernsey’s convenience and strong international reputation. “Our track record speaks for itself”, he says. “Guernsey has more companies listed on the London Stock Exchange than any other jurisdiction outside the UK.”
“Guernsey is essentially a one-stop shop for businesses”, Pleasant adds. “Guernsey has a very healthy ecosystem of providers. In one day, a company can meet with the regulator, an administrator, a lawyer, a tax advisor, and even the Chief Minister.”
Finally, Pleasant highlights that Guernsey’s offering is enhanced by its highly qualified non-executive directors. With professionals from leading firms and more directors qualified through the Institute of Directors than any other jurisdiction, Guernsey can add significant substance to businesses.
Regulatory benefits
We turn to Guernsey’s commitment to tax cooperation and financial transparency, and whether this regulation brings benefits to the UK. “Our approach is to examine and implement the highest global standards”, Pleasant explains.
He recognises this is sometimes challenging when compared to other jurisdictions, but Guernsey remains committed to following and implementing high standards.
“The aforementioned £57 billion is capital that has come to Guernsey due to, not in spite of, our high standards”, he claims. “If you look at previous examples like the Foreign Account Tax Compliance Act and the Common Reporting Standard, we were early adopters and are fully whitelisted by both the OECD and the EU in terms of tax transparency.”
He continues, “When it comes to Pillar one and two of the Base erosion and profit shifting (BEPS) framework, we will fully comply, just as we always have with international regulations.”
Looking ahead
When asked about how the relationship between Guernsey and the UK is likely to develop, he argues that the relationship is fundamental: “we expect this strong bond to continue developing, with Guernsey remaining a vital conduit for capital and investment into the UK.”
However, he notes that changes to the UK’s non-dom regime and carried interest system are expected. “However,” he says, “given Labour’s focus on foreign direct investment, it’s important to let Guernsey continue doing what it does best: investing into the UK.”
“Since 2020, FDI from Guernsey has increased by 14 per cent annually, which shows our contribution is consistently growing. For every £1 million invested, £98,000 is added to the UK’s gross value and 2.9 jobs are created.”
To Pleasant, the change of government is not a concern. “It’s all about diplomacy, relationships, and education”, he explains.
“Our external relations team, along with regulators and ourselves, are attending the party conferences to connect with the 335 new MPs. Many may be unfamiliar with Guernsey’s financial relationship with the UK. This presents valuable opportunities to introduce ourselves and highlight Guernsey's role as a net contributor to the UK economy.”
We close with a straightforward takeaway. “Our message is simple”, he says, “approach us with an open mind. Don’t come with preconceptions. Let us demonstrate what we can do for the UK.”
In summary, the relationship between Guernsey and the UK is undeniably symbiotic. Guernsey’s success is the UK’s success, and there’s a clear sense of excitement about the opportunities and engagement that lie ahead. Both economies stand to gain, and the next chapter promises further collaboration and growth.