Guernsey’s economy contracted by 2% in real terms in 2023 due to a sluggish financial sector, according to a group of senior business leaders.
Guernsey Board of Directors (IoD) economic director Richard Hemans said the island’s economy had fallen for the first time since the pandemic and was underperforming compared to Jersey and the UK.
Mr Hemans said the main reason for Guernsey’s gross domestic product (GDP) decline was a 3% decline in the financial sector.
“If the performance of the island’s financial sector deteriorates, the island’s economy will also suffer,” he said.
“If the economy is shrinking, we’re all feeling a little bit poorer,” he said.
Guernsey’s GDP increased by 0.6% on 2019, while Jersey’s GDP is estimated to have increased by 5% over the same period, according to the first figures released by the states this week.
He said there was also a “positive record” with growth in some parts of the financial sector in 2023, including insurance (up 17%) and funds (up 8%).
Hemans said the U.S. prioritized the financial sector given its size, which accounts for 40% of the island’s economy, despite some booms in other areas of the economy, such as hospitality and management. He said that this means that there is a need to provide support.
“To close this gap[with Jersey]Guernsey must focus on pro-growth policies similar to the New Labor government in the UK,” he said.
Mr Heemans said the state’s admission of a potential £24 million deficit meant it was important the island lived within its means.
“We need to make sure that our finances are sustainable. We need to make sure that our revenues are commensurate with our expenditures,” he said.
He said the U.S. has four options to address the budget deficit: either raise taxes, cut spending, borrow or grow the economy, and that “clearly the preferred option has to be growth.” said.
“We need to invest in the financial sector. That is our golden goose,” he said.
