Further economic growth forecast for the Island in 2013

| January 14, 2013 | 0 Comments

MINISTER for Economic Development John Shimmin MHK has spoken of his optimism for 2013.

Minister Shimmin commented:

‘The start of the working year is a good time to reflect on our economic performance in 2012 and look forward to our likely performance in 2013. I would like to convey 3 key messages at this time. Firstly, the Isle of Man performed well in 2012 in what was a tough global economy – our estimated growth for the year was 3% in real terms compared with the average of 1.4% across the OECD (comprising the world’s major developed economies). Secondly, I and my colleague Mr Teare in Treasury are confident we can do even better in 2013. We are forecasting growth of 4% in real terms compared to the OECD average of 1.4% in 2013. Thirdly, my Department is playing a key role in driving this growth, working closely with colleagues in Government and the private sector. The foundation for sustainable growth is development of our key export-generating sectors, such as financial services, manufacturing, ICT, e-gaming, tourism, aviation and ship management. My Department continues to both aid existing local businesses to expand as well as attract new businesses in these key sectors. We estimate we helped to create 130 jobs in these sectors in 2012, which then stimulated growth in the wider economy. We are forecasting this figure will increase to 180 jobs in 2013, building our confidence that our overall growth projections are credible in what will continue to be a tough global market.

In summary, I believe we can take much comfort that our Island continues to enjoy a strong, growing economy which is vital if we are also to achieve Government’s other priorities of balancing Government’s budget while protecting the most vulnerable in our community.’

[In approximation, for every job in export-earning sectors, the Island’s economy typically has 2.5 additional jobs in other supporting sectors, including the public sector. Also, for every worker on the Island there is a dependant, including children and retirees. So every time a job is created in (say) a manufacturer or insurer, that job is helping to support 7 people.]

The Department will be focussing on 3 key areas in 2013 with an extensive range of activity planned to take place, building on the successes of 2012.

Minister Shimmin commented:

‘I have made it clear to my Political Members and management team that we must push hard for further growth in what will be a crucial year. Our 3 priorities for 2013 are:
• Maintaining growth in Financial Services
• Supporting the wider economy
• Helping the unemployed into work.

‘I will now provide an outline of each of these. More detailed information will be released over the coming months.

Maintaining growth in Financial Services

‘While we continue to diversify the Island’s economy, Financial Services remain vital for the Island, accounting for a third of our National Income. Financial Services are also becoming increasingly diverse, with a wider range of products and services in more global markets than ever before, which helps to protect our economy from shocks in any one area.

‘I believe Government has taken bold decisions recently to ensure that the Isle of Man is at the forefront of transparency and ensuring our international reputation remains positive. Our industry leaders have been supportive of Government’s proactive decision to enter into an agreement regarding automatic exchange of tax information with the UK and we expect it to create some new opportunities for the sector.

‘We recognise the value of working directly with both industry associations and there have been many positives arising from the creation of the Isle of Man Finance Partnership Steering Group. The group has been forging ahead with a number of initiatives reflecting the excellent relationships that exist between the Department and the private sector.

‘The Department has also been supporting growth in key countries in line with our Country Strategy which we developed and deliver in collaboration with the private sector. The UK remains our key target and there is a full programme of activity planned for 2013. Overseas activity has included recent visits to China and India as well as representation at the 2012 Middle East Business Aviation event (MEBA) held in Dubai which was a key event for wealth management and aviation. We have an ambitious programme for such visits in 2013.

‘Banking remains a key sector. My Department is working closely with the Isle of Man Bankers’ Association on the requirements of the UK for access to information, protection against execution risk, and legal certainty of outcome. This joint programme will help to protect and grow the Island’s vital banking sector through a range of initiatives including regulatory changes, improved insolvency provisions and more flexible licensing structures as well as proactive marketing campaigns to secure new jobs and businesses.

‘My Department will also ensure legislation which generates economic benefit will be prioritised, alongside the need to protect our society, to drive the speed of innovation in business. This will ensure that we are at the forefront of new industry developments and opportunities in banking, corporate services, funds management and insurance.

Supporting the wider economy
‘Here we need to both continue to diversify the other wealth-creating sectors of our economy while giving appropriate assistance to the key service sectors.

‘Manufacturing continues to enjoy a real resurgence on the Island. We are helping 7 new manufacturing companies to set up on the Island. 2 are in engineering, 2 in aerospace and 3 are in general manufacturing. ‘They are forecast to create up to 30 new jobs. We have helped the aerospace cluster to grow such that they are looking to treble apprentice numbers to 36 each year, providing skilled new jobs for the Island’s young people. We are developing a new apprenticeship scheme for engineering in conjunction with the Department of Education and Children, the Chamber of Commerce and the manufacturing industry with a target launch date of Sept 2013.

‘e-gaming has been a critical sector for us in recent years and now accounts for 8% of National Income and well over 700 jobs. 9 new gaming licences have been granted this year following which 2 companies have commenced trading. 13 jobs are likely to be created in the next year from these businesses. Also existing businesses continue to expand, creating further jobs.

‘Information and Communication Technology (ICT) and e-business offer excellent potential for further growth. 4 new businesses have set up creating 15 new jobs. This figure is forecast to rise to up to 22 jobs after 12 months. My Department is working closely with the private sector on plans for further growth and we believe this will be a key growth area in future years.

‘The Aircraft Registry has been rated the best register for corporate jets in the world by a society of international lawyers. DED’s expertise and excellent service have helped the local private sector to create 80 jobs at an average salary of £40,000 to support these aircraft. The local private sector then has the opportunity to win further business from these valuable clients.

‘The Ship Registry has worked hard to attract new shipping business to the Island. For example, the Ship Registry has been promoting itself in Asia for over 8 years; the first Asian ship joined the register 4 years ago; and today Asian shipping accounts for 28% of the tonnage on the Isle of Man ship register. Again, this is bringing vital new jobs and income to the Island.
‘Tourism and hospitality remain important sectors for the Isle of Man, especially in terms of jobs and influence on the overall quality of life we enjoy in the Island. We are pleased that our visitor numbers held up well in 2012 when many British Isles destinations saw large declines. In line with our strategy for the visitor economy, we are committed to driving up quality and seeking to exploit new markets. For example, extreme sports and Visiting Friends and Relatives, which are not weather dependent. A detailed Destination Management Audit has been conducted into our tourism infrastructure to form the basis of this drive towards further quality. ‘Additionally we are continuing to support and deliver new events to help enhance the visitor economy such as the TT Triathlon in June 2013 and the Classic TT in August 2013, part of the new Isle of Man Festival of Motorcycling.

‘We know the importance of creating the right environment for business and we are committed to ensuring that the Island is seen as an ‘enterprise zone’ to attract new businesses requiring the services of our ‘real economy’ sectors. For example, in order to assist inward investment and the Construction sector, we have prioritised work with the Department of Infrastructure to identify, and make available, sites suitable for economic development purposes by 31 December 2013.

‘The sectors supported and the types of support is continually being reviewed and updated. We have just completed a major review of my Department’s Financial Assistance Scheme to ensure it remains attractive to potential investors, flexible and competitive. We will be announcing important improvements to the Scheme shortly.

‘We remain a business-friendly location but will seek to reduce bureaucracy wherever possible in order to make it even easier for local firms to conduct business.

‘We will also be bringing forward a new Control of Employment Bill this year with the objective of ensuring the current Work Permit system is supportive of economic growth while at the same time protecting vulnerable sectors and individuals.

Helping the unemployed into work
‘The Isle of Man has a much lower rate of unemployment than that of much of the rest of the developed world and our close competitors (our rate is 2.3% as at the end of 2012 compared to the OECD average of 7.9%). However I am conscious that the number of people who have been unemployed for over a year continued to rise for much of 2012 to nearly 200. This has a large social cost as well as cost to the taxpayer. Providing additional support to those who need it will be a key priority in 2013.

‘We have already expanded our support in 2012. For example, our work placement programme provided placements for 150 young people not in employment, education or training (NEETs). As a result, 50% gained employment following participation in the programme and we are starting to see the number of long-term unemployed fall.

‘We will expand our initiatives to assist the long term unemployed (including young people) and persons with a disability into employment, including the introduction of a Community and Social Enterprise Fund, a ‘Payment by Results’ scheme for professional agencies and a programme of work placements with both public and private sector organisations. This will be done in close collaboration with the Department of Social Care as well as private, public and third sector employers.

‘Despite a fall in the overall number of Work Permits issued, greater scrutiny continues to be applied in certain sectors to ensure employment opportunities for Isle of Man Workers. For example, all applications related to positions within Construction are placed before the Work Permit Committee.

The Minister concluded:

‘I believe my Department in conjunction with Treasury and the private sector are in a strong position to continue to deliver the growth our Island needs. We are committed to increasing our level of visibility in terms of off-Island business development. Finally, I am committed to ensuring Tynwald, the public and the business community are actively engaged and informed so we can achieve this growth together and do so visibly.

‘2013 will be challenging for us in a number of ways, but I believe we are well-equipped to tackle the priorities that I have laid out.’

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Category: Economy, Finance & Business

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