The Channel Islands’ strong economic foundations are reflected in some of the highest GDP per capita rates in the world.
But without action, the economies of Guernsey and Jersey could be especially vulnerable to decelerating global growth, faltering productivity in mainstream financial services and disruptive trends ranging from rapid advances in new technology to ageing populations, deglobalisation and climate change.
PwC Channel Islands’ new Island Index gauges how prepared Guernsey and Jersey are for the disruptions ahead, along with analysis of Malta and the Isle of Man.
The newly launched Sustaining prosperity and growth report also analyses the growth prospects for each of these islands between now and 2050.
Key points in the report include:
- Ageing populations and declining workforces could put severe pressure on economic growth, tax income and public finances. Attracting more women into the workforce and providing incentives for people to work for longer before retiring could help to offset some of the potential labour shortages and boost taxation. Further options include attracting more workers from overseas, though attitudes to migration vary, as does the islands’ capacity for population increases.
- Both Guernsey and Jersey have made net zero commitments and are grappling with the challenges of implementation, alongside improving climate resilience. New approaches to financing, upskilling and collaboration may be needed. More could also be done to capitalise on the opportunities opened up by the net zero transition.
- Both Guernsey and Jersey’s ability to develop the policies needed to tackle the challenges ahead benefit from strong confidence in their institutions.
- Modelling suggests that economic growth could be moderate at best and some way below the OECD average. Without any improvements to skills and productivity, GDP per capita could fall. This underlines the importance of boosting productivity through increased investment in skills and technology.
Despite these challenges, there are opportunities for Guernsey and Jersey to capitalise on their potential and take the lead in areas like climate action and sustainable investment.
Drawing from the Island Index and economic projections, this PwC report outlines key considerations for businesses and governments as they seek to strengthen and sustain relevance, resilience and growth:
Priorities for government
- Protect and evolve the finance industry
- Accelerate the green transition
- Invest in productivity and innovation
- Become a magnet for talent in a mobile world
- Lay the foundations for future success through strong government finances
Priorities for businesses
- Boost the talent pool
- Collaborate to compete
- Seize the green opportunity
- Invest for the future
- Embrace the silver economy
Commenting on the launch of the Island Index, Evelyn Brady, PwC Channel Islands Partner and Guernsey Office Leader said: “Guernsey is at a crossroads. We can no longer take our economic success, standard of living and quality of life for granted as we come up against the disruptive impact of ageing, climate change and slowing global growth.
“Our ability to compete depends on investment in skills, connectivity and tech-enabled productivity. We also face some tough decisions on migration, public finances and tax policies as declining workforce numbers not only put growth at risk, but also reduce tax income.”
From a Jersey perspective, Lisa McClure, Partner and Jersey Office Leader at PwC Channel Islands added: “People in Jersey continue to benefit from good employment prospects, a high standard of living and strong levels of government investment. But sustaining these advantages in the face of an ageing population, a tightening labour market and faltering productivity growth in mainstream financial services will be challenging.
“Key priorities ahead include diversification of the economy, further investment in skills and infrastructure and the ability to build on the island’s strengths in fast growth areas such as private markets and the green economy.”
For more details on the findings, the Island Index: Sustaining prosperity and growth report is available here.
Pictured: James Linder, principal author of the report.
