The IoD Guernsey’s first Directors’ Economic Confidence Survey shows that business leaders feel confident in their own organisation’s prospects over the next 12 months, despite revealing a negative sentiment towards the island’s overall economic outlook.
The survey received feedback from over 20% of the organisation’s membership, which is an excellent result and gives the survey strong statistical validity. Financial services dominated the sectors responding but there was good representation across all sectors, meaning that respondents approximately mirrored the island’s industrial make up.
The responses show a -18% net positive1 sentiment about Guernsey’s economy over the next 12 months, with the highest proportion saying they feel ‘quite pessimistic’. Less than one quarter of industry sectors represented in the survey felt optimistic about the local economy.
Local opinion about the island’s economy is less optimistic than UK business leaders’ sentiment, with the most recent UK IoD survey revealing a -3% net positive reading about the UK’s economy.
However, Guernsey business leaders say they feel confident about their own organisation’s prospects, with a +47% net positive response to the question, and the majority saying they feel ‘quite optimistic’. This compares with +41% In the UK.
In terms of different sectors, 11 out of 14 industries represented in the survey posted net positive results for the question: how optimistic or pessimistic are you about your own organisation over the next 12 months?
Leader’s positivity in their own organisation’s prospects is backed up with a +30% response about increasing revenue over the next 12 months, with the majority of business leaders also saying they will be increasing headcount and continuing to invest in their business.
In comparison, UK businesses feel more optimistic than local leaders about increased revenues, with +45% saying they expect revenues to rise over the coming year.
Whilst revenues are set to rise, +75% say they expect their costs to be ‘much higher’ or ‘higher’, and +21% expect their investment in the company will also increase. Unsurprisingly, profit increases will be stagnant, with a net positive percentage reading of only +1%.
When asked about the negative impacts on their businesses, respondents rated air and sea links, cost and availability of labour and skills shortages/skills gaps as the top three concerns.
Shortage of housing for employees and compliance with government regulation were cited as the fourth and fifth most significant challenge. Wider economic conditions, local economic conditions and political uncertainty also made the top 10 concerns.
These themes were mirrored in general comments from respondents, with statements focusing on housing, the slow pace of government decision making, connectivity issues and regulation in financial services. “This is a key piece of economic data which will help us to understand the state of the local economy and the important business issues, overall and by sector, and to inform the States of Guernsey’s thinking. We can look at current issues and trends going forwards, tracking business sentiment towards challenges like housing and connectivity, which organisations rely on to conduct business and to attract and retain staff,” said Richard Hemans, the IoD Guernsey’s economic lead who is behind the survey.
Mr Hemans continued: “There are lots of positives, with respondents feeling optimistic about the prospects of their own businesses and looking to employ and invest over the next 12 months. Whilst the overall view of the Guernsey economy is negative, the other responses indicate some confidence and positive if muted economic growth over the next 12 months.
“It is encouraging that businesses are still looking to employ people and invest in their productive capacity because it suggests confidence in their prospects. The negative impacts reported are not new news but clearly need to be addressed with urgency.’
“We would like to thank everyone who took part in the survey. We are confident this is representative of our membership view and this first edition gives us a good baseline for our future, bi-annual surveys.
“The IoD will be considering the data carefully to help us shape our future activities. We are sharing the information with Deputies and senior civil servants and we look forward to working with policy makers and other business organisations over the coming months to understand and help to improve business confidence.”
In response to the IoD survey, Guernsey’s President of the Committee for Economic Development, Deputy Neil Inder said: “I welcome the views of IoD members through the survey and recognise the concerns they raise. Many of the key concerns they highlight such as travel links, attracting skilled staff and housing are priorities for the States and issues we are actively addressing.
“I am however encouraged that the vast majority of respondents are optimistic about their own organisation over the next 12 months, and have positive expectations in terms of levels of investment, revenue and job growth and I think that in itself speaks to reasons for being more confident about the Island’s economy as a whole – an economy that grew above expectations, by 7% in real terms in 2021 and 4% in 2022 (the most recent years for which data is available). The confidence and optimism levels are also demonstrative that Guernsey continues to be an attractive and competitive jurisdiction to do business. None of that however is reason to be complacent, and we take very seriously the need to address some of the key issues raised in the survey, and maintain and grow confidence in the Guernsey economy.
“We are currently working through a formal tendering process for our sea links, with Jersey, to secure the best possible passenger and freight service. I can’t comment on that in any more detail as it’s an ongoing process, but we expect it to conclude before the end of the year and look forward to being able to make that announcement.
“With regard to air links, we know there have been real challenges for Aurigny and we share the frustrations of businesses, and everyone else who has been travelling to and from the Island.
“But having been faced with a ‘perfect storm’ of issues, Aurigny have been very open about the steps they are taking to address them, streamlining their fleet to be more efficient and reliable, and consolidating their new routes while maintaining key new destinations such as Paris.
“In terms of being able to attract workers with the key skills, whether they are young islanders already here or coming from elsewhere, housing is a key challenge. As a Guernseyman and a father of two I have real concerns that where Guernsey used to be an exporter of tomatoes and flowers we are now heading towards the export of our young talent. That’s a carve-out of culture and heart of the people of this Island, those of us who grew this Island through our labour and diligence to create the vibrant economy that we have today. We owe it to our sons and daughters to deliver on a build programme of the existing sites and at least give them something that looks like hope and a future in their Island. Anything less is failure.
“The Policy and Resources Committee is continuing to explore a significant investment into developing Leale’s Yard which would also make a big difference in providing additional housing. And initial drafts of the Guernsey Development Agency’s presentations have further focus on the Bridge and, if the stars line up, there is a real opportunity to provide the desperately needed housing for many of our Islanders and businesses. We need to deliver on all those fronts. The people of Guernsey don’t want to hear about another policy and another review, neither I do. The failure in housing is simply that there aren’t enough of them; the Policy and Resources Committee has put housing as central to their success as we head towards an election; I’m confident they will deliver on his key policy.
“But we also need to invest more in our Island, not just in housing, but in our infrastructure and public spaces. We can expect to see more on that from various States Committees this year.
“By making that investment, we can not only improve the services available to Islanders but also help to grow confidence in our Island’s economy. Guernsey’s a great place to live and do business, but it needs to be for everyone. I remain confident in the future of the Island as does the IoD, and I welcome the input from their Pulse Survey.”
Click here to read the survey results in full, on the IoD’s website.
Response rate – The IoD had 146 responses, more than 20% of the membership, which means it is statistically valid with a near 85% confidence level that it represents the views of the IoD Guernsey membership of 706 members. There was a good representation across all sizes of employer by number of employees and turnover.
Measurement – All responses are measured as a net positive %, which is the number of positive responses less the number of negative responses expressed as a % of the total respondents.
