Lloyds TSB’s second quarter breakfast briefing was held on Friday and featured an update on the state of the Manx economy by the Minister for Economic Development, The Hon Allan Bell MHK. The event was held at the Claremont Hotel in Douglas and was well attended by members of the local business community, particularly representatives of the financial services sector. After an introduction by Trevor Kirk, Lloyds TSB’s local Head of Corporate Banking, the Minister began by recognising that the banking sector is “hugely important” to the Island and then went on to offer a ‘health check’ of the economy, noting that “the economy is still doing well” with an estimated net growth of between 4% and 5%, making it one of the fastest growing economies in Europe. He stated, “Although there are some difficulties in one or two areas, the majority of sectors are still growing strongly and we will not go into recession”. He reported that unemployment is at about 1.9%, which is low in global terms but relatively high for the Island, but the Minister expected this to fall over the summer. He also reminded listeners that the Island’s reserves are still at around ?1.4billion, that the AAA credit rating remains unchanged and that the Island has no external debt except for the MEA. The Minister also explained that despite the recent ‘forced renegotiation’ of the VAT sharing agreement, the Manx Government has not seen a shortfall in its budget as expected, largely due to the increase in VAT to 20%. The Hon Mr Bell credited these successful figures to the diversity of the Manx economy, highlighting the Island’s strong space, aviation and film industries as examples of its branching out beyond its traditional core of financial services. These successes were, however, balanced against some struggling industries, including local services, hospitality and retail. He picked out the high energy costs caused by the MEA debt as a particular problem for local manufacturers. The role of the recently created Department for Economic Development was, he said, to pursue even greater diversification of the Island and support those struggling sectors. Speaking on challenges coming up in the future, The Hon Mr Bell pointed out that while unemployment was not high, over 50% were young workers under the age of 24 and that youth unemployment was a significant issue which the Department of Economic Development was working on. The Minister also expressed concern over the effects of an ageing population and the ‘ticking time bomb’ of the old age pension system, which he said would become a major issue over the coming decade. On the subject of the film industry, the Minister responded to criticism that had been levelled against it in the press recently. He argued that the funds set aside for promoting and supporting films for the Island had all been raised from previous ventures by the same industry, meaning that “not a single penny” of tax payer’s money had been spent on the industry, while hundreds of millions of pounds had entered the economy in related local spending. Despite these criticisms, the Minister’s message was generally positive and was well received by the audience, who had the chance to ask a number of follow up questions at the end of the event. Trevor Kirk commented on the event: “I’m very pleased that the Minister was able to provide such a comprehensive analysis of the state of the Manx economy. We put these briefings on every quarter in order to provide our clients and potential clients with access to key decision makers and up to date information, and this event was particularly successful in that regard. It was also very pleasing to hear such an honest and confident appraisal of where and how the Island can improve itself.” - ENDS -