Bermuda's economy is in a recession and the Island is at a turning point in its history.

That is the reality facing the Island's business community according to US Consul General Gregory Slayton, who was talking to delegates as keynote speaker on the first day of the 22nd International Reinsurance Congress held at the Fairmont Hamilton Princess hotel yesterday.

Mr. Slayton said Bermuda had prospered for the past 20 years due mainly to a tax treaty agreement signed with the US which helped open up its market to free trade, in addition to hard work and entrepreneurial spirit.

But he added that it needed to come up with new ideas and change with the times in order to keep its competitive advantage.

"I think that Bermuda and the US are in a recession and it is not going to be a mild recession," he said.

"Bermuda has not seen a serious recession in 20 years, but recessions are a natural part and process of the business cycle and firms or countries that recognise and adjust to the changes in the environment will utilise their resources more effectively and will do better coming out of a recession."

Mr. Slayton set the scene by saying that over the past two decades the Island had enjoyed unparalleled economic growth, primarily down to the country's international business industry, which had allowed it to maintain a competitive edge over its rival jurisdictions, and made it the envy of the rest of the world, with the highest GDP (gross domestic product) according to the World Bank, less than two percent unemployment and providing about 40 percent of reinsurance coverage written in the US.

He pointed out the importance of Bermuda's international business sector, claiming 80 percent of the Island's economy is dependent on it, while even those who do not work in the industry serve it in some form through their trade.

"That is important because the international business sector is right now being hit by a severe global recession," he said.

Mr. Slayton said a company or country's biggest asset was its personnel, of which he reckoned there were three types of worker, including job makers (business leaders, entrepreneurs and employers), job takers (those who offer more value in work output to their company than their salary and benefits) and job fakers (those who do not offer value and are a burden on the whole economy).

"Here in Bermuda there are really two types of job makers — there are local Bermudians who are making good jobs, but the biggest job makers are international business leaders who bring their companies here and expand those companies in Bermuda," he said.

He believes Bermuda is at a turning point with the current global financial crisis and other off-shore destinations are lining up to take advantage if it slips up.

"I think given this and the fact there is going to be a significant impact on Bermuda's economy, this is the time for Bermuda's business leaders to get together and figure out how to maintain its competitive advantage," he said.

Mr. Slayton proposed allowing more job makers to come into the Island or leave better trained job takers, having more effective public/private partnerships across the board, in terms of the labour market, and following up the Bermuda Monetary Authority's Solvency II model equivalent and it and Government's work and legislation on anti-money laundering the regulatory front.

"I am suggesting the creation of a joint economic leadership team to deal with the issues facing Bermuda because I am concerned about Bermuda's future and I am concerned about the economy," he said.

"I think it might be dangerous for Bermuda to continue as business as usual.

"These current challenges provide an opportunity for business and Government leaders to work together to figure out how to make changes that will lay the groundwork for Bermuda's economic miracle to continue for the next 20 years.

"As a trained economist, I look at large amounts of data from Bermuda and the US. This data is pretty clear that both Bermuda and the US are entering a recession which is now here."

See related story, Page 36