The Report, entitled ‘Review of Guernsey’s economic profile and assessment of future opportunities’ and prepared for the States of Guernsey argues that there is no ‘silver bullet’ in economic development and that analysis of comparable jurisdictions shows a high degree of similarity in approach and policy.
Its author Neil Gibson, who is the director of Oxford Economics’ regional services division, presented the key findings of the report entitled ‘Review of Guernsey’s economic profile and assessment of future opportunities’ at a public presentation in Guernsey a month ago.
But Gibson was also quoted by the Guernsey Press last Friday as describing that the UK government moves on LVCR and Qrops were attempts to claw back tax revenue rather than direct attacks on the island, and that Guernsey would be right to show a degree of caution in economic development.
The Report itself stated that “diversifying away from one dominant sector is a focus for many economies, and developing niche specialisms, such as the space industry in the Isle of Man, reflects this strategic drive towards a broader sectoral offering.
It added that “the need to diversify is very evident when the scale of Guernsey’s dependency upon the financial services sector is measured”, representing as it does 21% of direct employment and 39% of gross value added with strong additional supply-chain linkages.
However, diversifying does not necessarily mean radical shifts to entirely new sectors, or areas to which the skills of the workforce are not well matched, it continued.
Gibson argued in the report that “the financial sector is already very internally diversified, with different specialisms and niches within the broad category reported in official statistics. Ensuring the strategy is supportive of the Island’s key global strength – recognising its subtleties and ensuring it is not downplayed as a result of the less favourable associations with the finance sector post-recession – remains essential even within an overarching aim to broaden the business base.”
Its research had broadly endorsed the strategic direction already in place in Guernsey, and re-iterated many of the messages already stated in previous strategic economic plans.
The track record of sector-based interventionist economic development policy was at best patchy, “but there is a clear role for the public sector in promoting a prosperous, sustainable and inclusive strategic direction.”
A number of challenges were also highlighted which will impact upon Guernsey’s short-term economic future, including:
- A challenging fiscal position, which can only be resolved with a higher tax take or a lower spend;
- High average costs of doing business, which demand a focus on higher value skills and activities to build a viable investment proposition;
- Regulatory changes and global tax policy, both of which bring uncertainty and damage business confidence;
- Labour supply and specific skills shortages, linked closely to a challenging but necessary housing and population management system;
- An ageing population, putting pressure on dependency ratios and public services;
- Rising welfare costs, including from a small but seemingly entrenched core of worklessness;
- Technology and infrastructure channels (primarily the airport and ICT) which need to be optimised to provide vital links to the outside world;
- Marketing and brand awareness of the Island, which are currently of a significantly poorer quality than they should be.
To read the full report click here
