‘Guernsey’s economy is stagnating’
A DEVASTATING assessment of the Guernsey economy was laid bare yesterday.
Guernsey’s Gross Domestic Product contracted 2% in 2023, the most recent year that figures are available, while Jersey’s increased by 7% – largely driven by a banking boom which seems to have passed Guernsey by.
And even without banking included, the island’s GDP output fell.
Accountant Richard Hemans, economics lead for the Institute of Directors, said that Jersey’s economy was clearly outperforming Guernsey’s, and was now 15% bigger than it was in 2019 and 18% bigger than in 2009.
Guernsey’s is just 1% larger than 2019 and has grown 5% on the 2009 figure.
‘Guernsey’s economy is stagnating right now and needs some growth,’ he said at an IoD breakfast event.
Mr Hemans said that the island’s GDP declined in 2023, with a 3% fall in finance, and the only growth sector was public administration, up 2%.
Meanwhile in Jersey finance’s GDP contribution was up 19%, its banking sector grew by 32%, boosted by rising interest rates, while at the same time Guernsey’s sector contracted by 11%.
Mr Hemans said that included ‘some specific issues at several large banks’ and RBC’s withdrawal out of Guernsey to centralise in Jersey.
And while Guernsey had some growth in investment funds, its fiduciary output was down, while Jersey had strong growth in both sectors.
Even inflation, persistently higher in Guernsey than Jersey, appears to be driven by increasing rents and rising air fares, while Jersey does not seem to suffer similar issues.
Mr Hemans said that Jersey’s house prices fell 10% and transactions were down by a quarter as the market normalised post-Covid.
IoD members have said, in a survey, that while they were broadly optimistic of the prospects of their businesses, they were less optimistic about the Guernsey economy, expecting inflation and profits to fall, but employment and investment to increase slightly.
‘With so much uncertainty, continuing headwinds and so many counterbalancing forces, GDP growth around zero to half a percent is projected in 2025, indicating stagnation,’ Mr Hemans added.
He said that alongside the island’s well-recognised demographic issues, Guernsey clearly had a productivity issue.
Guernsey productivity declined by 3% in 2023 and has only improved 2% in the past 15 years, while Jersey’s was said to be up 8% in 2023 and 12% since 2009. Mr Hemans said that this showed that Guernsey living standards had ‘barely changed’ over the period.
‘Low productivity undermines our competitiveness,’ he said, suggesting that infrastructure investment would be important to improving it.
‘The island’s economy is not growing, which needs to be addressed by developing our workforce, reviewing finance sector regulation, infrastructure investment and further diversification to growing sectors,’ Mr Hemans said.
‘We need to recognise there is an issue and resolve it positive and collectively, as we have in the past.’
