Guernsey: What US Managers Really Think Of Brexit

Last Updated: 22 November 2016
Article by Kate Clouston

Most Read Contributor in Guernsey, November 2018

Kate Clouston, Director of International Business Development at Guernsey Finance, looks at opportunities for Guernsey from the US funds sector. No surprise, the US presidential race and Brexit are the topics du jour.

The watchword is uncertainty. Systematic risk and global economic volatility have once again taken centre stage this year, calling us back to those turbulent months in 2007-2008 when it seemed the sky was falling. While there have been promising signs of recovery in the intervening years, the UK's Brexit vote and the upcoming Clinton/Trump face-off serve as a reminder that the future remains unpredictable, and we must do the best we can to protect those for whom we are responsible.

In early June, Guernsey co-sponsored an investment funds conference with the London Stock Exchange in New York. Following the conference, two road shows took place during which we shared updates from Guernsey and learned more about market conditions in the US. Universally, the first few minutes of every meeting involved our US friends apologising for the potential 'Trumpocalypse', and ourselves equally apologetic for all the furore surrounding Brexit. In every meeting the conclusion in the room was one of nervous laughter and declarations that neither world-altering event had a chance of happening.

We've been proven wrong on one count already, and we must prepare ourselves to be wrong on the other. Uncertainty of such a magnitude means investments are on hold, deals aren't completed, funds aren't listed, and everyone is waiting to see what happens next. How can one make sense of such chaos? Fortunately, it's not all bad news.

US-UK relations are very unlikely to be significantly damaged by the Brexit vote. Mutual investments, import/export relationships and human capital all strengthen this bond. There are mountains of data to support the fact that the US and Europe are each other's largest trading partners—the UK by far takes the lion's share compared to continental Europe. For example, the US and UK share the world's largest bilateral foreign direct investment partnerships.

In 2014, two-thirds of US FDI in the UK went to holding companies ($248bn) and finance and insurance ($152bn). The UK is host to 22% of US foreign assets in Europe, and affiliates in both countries employ between 1.1m and 1.2m workers in the other. It seems safe to say that both countries will be eager to resolve reasonable and mutually beneficial bilateral agreements. From the US perspective, it will certainly be easier to negotiate on a bilateral basis rather than striving to find an agreement that satisfies 27 partners.

Even so, questions remain over the UK economy's ability to recover from the shock of Brexit, with the depreciation of the British Pound cited by many as a disaster. But there are always winners and losers in any situation, and in this case the FTSE 100, for example, is likely to benefit thanks to their international focus and overseas earnings. Unfortunately for many, the answer is that is too soon to tell exactly what the longer-term effects on the economy will be.

Some managers in the US raised concerns over market access to the EU via the UK. The unwinding of the UK-EU relationship can't possibly conclude before 2019 and many will be seeking some certainty in terms of regulatory environments and market access. In a bizarre twist of events it is Guernsey, which has comfortably maintained 3rd country status with the EU for decades, who is helping advise the UK on how to proceed. Guernsey itself plays an integral role in facilitating capital flows into and out of both the UK and the EU—and this will not change. Guernsey will remain a jurisdiction of stability, likely continuing to act as conduit for an excess of £25 billion of overseas (non-European) investment into the UK from global investors, and £71 billion of investment into Europe—of which £51bn is from global investors.

The political volatility of 2016 is almost unprecedented, and that is heavily contributing to economic uncertainty. Many in the US financial world are questioning how the vote in November will affect them. While at first glance it may seem US domestic tax developments are less relevant for the UK or Guernsey, issues such as corporate tax rates and free trade agreements have far-reaching implications. Neither candidate in the forthcoming election has been particularly candid about their economic policy, although both are guilty of adopting a protectionist stance, opposing the TPP favoured by the Obama administration and promising to revisit trade agreements.

Perhaps a greater worry for those of us outside the US is the ominous silence on the issue of US debt. Whoever ends up seated in the Oval Office in January will find almost $20trn in debt on their desk. Federal debt in the US held by the public has doubled since 2007 to 75% of GDP. This debt will continue to grow, especially if interest rates are likely to rise. Indeed, Federal Reserve chairwomen Janet Yellen indicated that the case for the Fed to raise its benchmark interest rate is building. An interesting move, considering that a 1% increase, for example, would cost $200 billion a year on $20trn of debt. Indeed, if mutual investment is the real backbone of the transatlantic economy, it is in everyone's interest to encourage the financial well-being of one the world economy's main engines.

Works consulted:

  • Wright, Mark Antonio. "It's Time for a U.S. – U.K. Free-Trade Agreement". The National Review, 1 July 2016. Accessed 26 August 2016.
  • Irwin, Neil. "We're in a Low-Growth World. How Did We Get Here?". International New York Times, 06 August 2016. Accessed 26 August 2016.
  • Smith, Geoffrey. "Here's Another Sign the U.K. Is Weathering the Brexit Storm". Fortune, 23 August 2016. Accessed 26 August 2016
  • MacArthur, Hugh, Global Private Equity Report 2016, Bain & Company, 2016.
  • International Monetary Fund, Total Debt to Equity for United States, retrieved from FRED, Federal Reserve Bank of St. Louis;, August 25, 2016.
  • International Monetary Fund, Global Financial Stability Report: A Report by the Monetary and Capital Markets Department on market Developments and Issues. Potent Policies for a Successful Normalization. April 2016.

This article was written in September and originally published in the October edition of FTSE Global Markets.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions