Supporting onshore financial centres

Although IFCs are heavily oriented towards financial services, the world’s largest financial centres are onshore: London, New York, Singapore, Tokyo, and Frankfurt.  Financial services are a massive industry for even major economies.  The United Kingdom economy is heavily dependent on financial services – with the sector accounting for 12% of GDP and 2 million jobs: two-thirds of them outside London.

This industry is supported by IFCs.  IFCs provide higher-quality, internationally-recognised legal institutions that allow investment to flow between countries at low cost.  In turn, this supports real trade of goods and services, as well as capital, between countries.  Niche financial vehicles created in IFCs provide specialised support to more widespread financial vehicles onshore.

This is particularly the case in the United Kingdom.  The British financial sector has close ties to the British IFCs.  Half of all investments that go through Jersey go into the United Kingdom: one factor that means Jersey supports over 175,000 jobs in the United Kingdom – and Jersey’s just one of several such centres.  For example:

• Guernsey’s funds sector channel £34bn of investment into the UK and earn UK-based fund managers £1.1bn in fees every year.
• Bermuda companies write a quarter of insurance premiums to Lloyds of London.
• Cayman-based is home to most of the world’s hedge funds, which employ 10,000 people in the UK directly and 30,000 indirectly.
• Jersey, Guernsey, and the Isle of Man provided £350bn of net financing to the UK during the financial crisis to support British financial institutions.

These centres are huge assets to the United Kingdom – both its financial sector and its wider economy – and should be protected and nurtured.