High perch nothing to crow about

Examination of the detail lying behind the headline figures for gross domestic product and its cousin ‘gross value added’ in the two islands shows just how reliant Guernsey is on the finance sector for its stellar performance.

And it is getting more so. Five years ago, finance accounted for 41% of GVA by sector, in 2017 this increased to 44%.

In cash terms, finance makes up £1.29bn of Guernsey’s £2.98bn GVA economy.

It should also be noted that admin, support services, professional, business and technical activities are not included in that ‘finance’ figure, despite the obvious inter-dependency. Together they account for another 11% of the economy.

Jersey, of course, has its own finance base powering it on. However, this sector accounts for ‘only’ 39.8% of its £4.38bn GVA.

It is still a lop-sided economy, but there is at least room for non-finance industries to share some of the load.

Construction, for example, is 7.3% of Jersey’s economy (Gsy: 4%) and hotels, restaurants and bars are 4.2% (Gsy: 2%).

Where this becomes important is in spreading the economic burden to generate those billions. Construction in Jersey contributes a mighty £320m. to the economy (a real-term growth of 9% year on year). In the same period Guernsey’s building sector has grown by 3.6% to £109m.

And while hotels, restaurants and bars might have brought slightly less to Jersey’s party in 2017 than 2016 it is still a £183m. contribution (Gsy: £55m.)

While Guernsey’s finance sector stays strong there is no problem. Its GDP per capita of £49k is a mighty 65% greater than the UK’s and comfortably ahead of Jersey’s £41k.

However, that is built on a two-speed economy where finance overwhelms statistics such as ‘productivity per worker’. Strip that out and the effect would be devastating.

Finance enables Guernsey to look down on its neighbours for the moment. But no one should pretend that perching on a single-leg economy is entirely comfortable.