Island ready to bounce back from Covid
GIVEN the circumstances, 2020 was a ‘stellar’ year for the island’s finances.
Success is a relative term, of course. Relative to other jurisdictions, including the UK, and relative to initial predictions.
Deputies heard this week that dire forecasts as Covid struck last year had been turned around by a strong bounce back of the economy post-lockdown.
As restrictions lifted and Guernsey relaxed into the Covid-free normal, a States revenue shortfall that at one stage was feared to be as much as £70m. turned into a £30m. deficit by the end of the year.
That, we learned this week, improved again to losses of between £5m. and £10m. once all the bills were in.
Stellar indeed.
It is a remarkable turnaround, blighted only by the extraordinary losses incurred by Aurigny, which look to be as much as £20m.
The overall improvement is based on ‘exceptional’ customs and document duty receipts and, most encouragingly, much better income tax receipts than expected.
While much of this good news is no doubt due to the enduring strength of the finance industry, ‘Chancellor’ Mark Helyar points out that other sectors such as construction, retail and real estate also finished the year in fine fettle. In total, 12 out of 19 sectors were paying more in tax over the final quarter than they had the previous year.
It is, in short, a total vindication of the approach taken by the island’s leaders to Covid-19. A rapid return to the near normality of an open island but with tightly controlled borders enabled the majority of employers to function well.
Of course, 2020 was far from a stellar year in every other respect. Many industries and business suffered grievously.
Nevertheless, last year’s better-than-anticipated performance gave the island a strong platform to start January.
The figures are not there yet but that strong start has no doubt been badly hit by the second lockdown.
The lessons of 2020 show, however, that there is every reason to trust that resilient island industries are ready and raring to start contributing to the tax coffers again the minute restrictions are lifted.