Friday 11 December 2020
The Guernsey Economic and Financial Stability Overview is published today and shows the significant impact the COVID-19 pandemic has had on the local economy, but also its relative resilience in comparison to other jurisdictions, and the 'bounce-back' already being seen in some sectors.
The report brings together statistics covering a wide range of indicators published by the States of Guernsey and the Guernsey Financial Services Commission to provide a comprehensive summary of the local economy. For the first time the December edition includes forecasts for GVA in 2020 and 2021 as well as a summary of the business support measure paid out to support businesses through the disruption caused by the global outbreak of COVID-19. GVA is forecast to contract by around 6.6% in 2020, which is a smaller contraction than the UK is expected to see, and similar to the figure forecast for Jersey in August. In 2021, GVA is expected to begin a recovery of between 2% and 5%.
Almost all sectors show evidence of contraction in the second quarter of 2020, but in most conditions appear to have improved in the third quarter. In some sectors, such as Construction; Real Estate and Information and communication, there is evidence that activity levels at the end of September were greater than a year earlier, likely lead by the high level of demand in the property market and the shift towards a greater degree of remote working.
The Finance sector is showing evidence of stress with a fall in total employment in the sector beginning in late 2019 and continuing into 2020. By the second quarter of 2020 the total fall in employment in this sector compared to a year earlier was 4.9%. Median earnings in the sector have increased suggesting that job losses have been concentrated in more junior positions. Remuneration data indicates that this is one of the few sectors where conditions appear not to have improved in the third quarter.
As at 20 November 2020, £43.7m had been paid to local businesses and self-employed people via the formal business support schemes (comprising small business grants, payroll co-funding and accommodation grants). 24% of this support had been paid to businesses and self-employed people in the Hostelry sector. A further 17% was paid to each of the Wholesale, retail and repairs and Construction sectors.
Deputy Mark Helyar, the Treasury lead for Policy & Resources said:
"We're starting to see a clearer picture of the overall economic impact COVID-19 has had. It is encouraging to see unemployment is back down, and that some sectors have quickly bounced back to the point where their activity levels are in fact up on 2019. At the same time, we need to be very aware that our Finance industry, which was arguably less impacted by the lockdown in the spring, is also taking longer to recover.
But we need to be realistic about what the world is going through and how much worse a situation we might have expected when the pandemic first arrived on our shores. We have a big challenge ahead of us, but what we've achieved as a community this year in our response to the pandemic has put us in as good a place as we could realistically hope to be."
