‘It’s looking good for Guernsey over Brexit’
GUERNSEY is in a good position regardless of the outcome of Brexit, attendees at this year’s EY Item Club winter forecast seminar were told.
But, warned Martin Beck, if there are major problems in the UK as a result of a no-deal, it will follow that the island will be affected.
‘When the UK catches a cold, Guernsey tends to sneeze,’ he said. ‘It will not be good news for Guernsey, either.’
Mr Beck, lead UK economist with Oxford Economics, was paying his annual visit to the island to deliver the forecast from EY’s Independent Treasury Economic Model Club, but this one came with a weather warning: ‘Brexit continues to cloud the outlook’ was the seminar’s subtitle and it was made clear that given the nature of events, the forecast could not be set in stone.
He started out by focusing on the UK’s gross domestic product and how it had been affected by such things as consumer spending, inflation, lending and unemployment.
He also observed that there had been a big change in the nature of employed people in the UK, with a significant increase in the number of UK-born people in work compared with a reduction in the number born in the EU and outside it. He suggested that this change already taking place was perhaps a sign that Brexit itself would not have a drastic impact on that area.
There were positives to be taken from lower inflation, but he said that a return to pre-recession levels was not on the cards. ‘We’re not returning to the pre-financial crisis world any time soon,’ said Mr Beck.
Turning to Brexit, he said that although a ‘hard’ no-deal Brexit was a possibility, he believed that a soft or soft-ish scenario was more likely and this would not have a dramatic effect on UK GDP, with the Item Club’s prediction being that it was likely to see only a small drop by 2030.
A no-deal would lead to disruption, but it was anticipated that ‘appropriate actions’ could see the effect on the economy being mitigated and therefore it was harder to predict what the outcome might be.
Guernsey’s economy grew by about 2% in 2017, he said, which was on a par with the UK’s, but there was never likely to be any dramatic increase in growth owing to the island being a very wealthy place.
‘But as far as Brexit is concerned, it’s looking good,’ he said.
