When we think of the financial 'centre' of the UK we immediately think of London. However, in recent years another location - that just so happens to be in the geographic 'centre' of the British Isles - has established itself as an important economic region. So what impact has banking had on the Isle of Man over the years? And how is the island coping with the global recession?
Perhaps unsurprisingly, agriculture and fishing have been the primary industries of the Isle of Man historically. Throughout the 19th century, the population of the island's capital, Douglas, grew rapidly establishing the town as the political and economic capital. This caused a gradual microcosmic migration towards the town, with 35 percent of the island's inhabitants living there by the turn of the 20th century. Today, Douglas is home to a third of the Island's population - an increase that has been stimulated by government incentives for new business and banking.
In 2006, the island established itself as an offshore banking centre to match such tax havens as Monaco and Guernsey, offering a 100,000 pound income tax cap and tax breaks for the thriving movie industry that was established in 1995. Such a tempting financial environment for business, bankers and savers confirmed the Isle of Man as a prime destination for offshore savings that has been reflected by their recent budget - in which tax for the income of companies off the island is 0%, whilst the standard rate for individuals is 10%.
The economic growth of the island, as well as its increasing dependency on banking for its GDP, has continued despite a tumultuous global economic climate and the backlash in opinion of offshore banking since September 11th. However, most recently, a survey conducted by the Scorpio Partnership promoted only good things about the island. It ranked the Isle of Man 8th in the Mobile Wealthy Residency Index ahead of Monaco and Guernsey ranking consistently high for criteria such as: economic and political stability, availability of quality housing, and tax and immigration (
iomtoday.co.uk).
It would be naive of me to predict what is in store for the future of the Isle of Man and its banking sector, but one can't help acknowledging the impressive establishment of the industry over a short amount of time. It is also worth noting the response in the industry when the Manx government announced its plans in 2006, Rupert Bradstock in The Independent states at the time: "If you're very rich and have a lot of mates, you'll find them in Monaco, not on the Isle of Man."
I wonder what Bradstock would say today?
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Paul Roberts writes about
offshore savings,
offshore interest rates on the Isle of Man.
