Wednesday 20 March 2024
General Update
Madam,
I will update the Assembly on a number of workstreams that the Committee for Economic Development is currently progressing, but before I do so, I would like to comment on Guernsey's overall economic performance.
Overall Economic Performance
The good news is that Guernsey's total Gross Domestic Product in 2022 was £3.35 billion, which is 11% higher than the estimate for 2021 in nominal terms and 4% higher in real terms.
That means that the total value of the goods and services produced in the economy grew by 4%, after taking account of inflation.
That is a testament to the strength of our post Covid recovery and the resilience of our economy.
Finance Sector Performance
A key element of Guernsey's economic growth can be attributed to the performance of our finance sector. The Financial and insurance sector contributed the highest portion (£1.3 billion) or 38% of total GDP in 2022.
If you include legal and accounting activities, GDP increases to an estimated £1.5bn. That is roughly 45% of the island's entire economic output.
As Members who attended the briefing by Guernsey Finance in January will know, the significant additional investment into our marketing that was agreed by the Committee and Policy & Resources is bearing fruit. I won't list them all, but recent new business has included two new investment managers, a new Guernsey life branch, a new trust company license, and a number of new fund structures.
This is great news for Guernsey and is a real sign of the confidence that investors have in this Island.
Banking Sector Challenges
Members will also be aware that there have also been challenges for local banking services. The number of licensed banks has fallen and in respect of the provision of banking services there have been concerns in relation to alleged delays in account opening times for some local business customers and concerns about the availability of credit cards for local residents.
In response the Committee commissioned Deloitte to undertake a Strategic Review of the local banking sector, to identify and investigate some of these challenges and to make recommendations on how to address them.
Members of the Assembly were invited to a briefing on the findings in February.
You will be pleased to know that the review is almost complete and we will then be consulting with the banks and the regulator as well as business bodies on how we take the recommendations forward.
In relation to access to credit, one of the barriers that has been identified has been the difficulty which credit reference agencies have in confirming the names and addresses of local residents as part of their due diligence to issue credit cards.
Electronic Electoral Roll
I am pleased to report that the Committee for Home Affairs has made real progress in this area and the Assembly will be debating a policy letter to establish an electronic electoral roll ahead of the 2025 General Election at this States meeting.
If approved, the policy letter will also enable credit reference agencies to access data contained within the new electoral roll from 1 December 2024.
I must congratulate Deputy Prow and the Committee forHome Affairs on this excellent piece of collaborative working which the Committee for Economic Development wholeheartedly supports and I hope that the whole Assembly will support this policy letter.
Office of the Public Trustee
Members will be aware that the Committee has political oversight of the Office of the Public Trustee. I would like to put on record the Committee's sincere thanks to Mr Luis Gonzalez, the current public trustee, who will be stepping down at the end of his term of office in April. The Committee has nominated Mr Brian Williams, the current Deputy Public Trustee, to take over and the States will be asked to approve that appointment shortly.
The Committee has commissioned an independent review of the Office of the Public Trustee, to ensure that it remains fit for purpose. This incorporates a review of its mandate, funding and oversight.
The review is underway and I will update the Assembly in due course on the review's findings.
Sea Links
Of significant interest to Members and the wider community is that of our sea links. I have been working closely with my Jersey counterpart, Deputy Kirsten Morel, in order to ensure that we have considered both the short-term challenges and the long-term opportunities in respect of our lifeline sea links on a pan-Channel Islands basis.
In January, and working closely with Jersey, the Committee decided to commence a pan-island market testing and tender process to secure a long-term ferry operator for March 2025 onwards.
We are near the completion of the first stage of market testing. I am pleased to say that we have had multiple expressions of interest, including the incumbent operator, so we can proceed with confidence that we are testing the market effectively.
Next month we will issue a joint invitation to tender, covering areas such as resilience, reliability, passenger experience and financial sustainability.
Guernsey and Jersey's collective view is that one market with one opportunity will provide the best long-term solution for our Islands' sea links.
And I would like to thank the former and the current Policy and Resources for their support on this process which is one of the most significant pieces of work for this Committee.
Air Links & Tourism
Members will be aware that Aurigny has established six new air routes for 2024, including London Stansted and Edinburgh, and the new direct link to Paris, which the Committee has supported with route development funding.
I am pleased to report that initial bookings for the Paris route are looking strong and the Committee is keen to invest in marketing to bring additional visitors to Guernsey via these new air routes to maximise the benefit to our local economy.
There has been some criticism of last year's visitor numbers, but it is important to put our visitor numbers into context and to recognise that most jurisdictions are still on a recovery path following the Covid-19 pandemic.
In 2023 there were approximately 215,000 visitors to Guernsey, excluding visitors from cruise ships and visiting yachts and long stay visitors, compared to 279,000 in 2019 before the Covid pandemic, an overall reduction of 23% over the 4-year period.
However, it is important to note that many jurisdictions have not yet fully recovered to their pre-pandemic levels of visitors. Jersey has also seen an overall reduction of 32% in its visitor numbers in 2023, compared to 2019 suggesting that Guernsey's tourism sector is recovering well.
The Committee has established an industry-led Tourism Management Board which will shortly be publishing its Tourism Strategy and which in 2023 allocated the Committee's events budget and a new tourism product development fund.
The Committee has also budgeted to invest £1.6 million in marketing Guernsey as a visitor destination in 2024. This is a significant investment and I am confident that this year will be a strong tourism season.
Digital, Enterprise and Skills
There are many other areas of the Committee's mandate on digital, enterprise and skills that I could talk about if time allowed. The fibre broadband rollout continues at pace and as at the end of February, 18,000 premises, representing half of island premises, are now fibre ready, with almost 10,000 properties already connected to the fibre service.
The Committee is also working on a two-year pilot for a Guernsey Enterprise Investment Scheme. Work continues on the skills strategy and implementation. This is with the Committee for Education, Sport & Culture.
Housing
A key constraint for the economy is a lack of available housing. For all the effort by this government on driving the building of either social or affordable housing, the Committee has concerns around the weighting towards key workers. All workers need somewhere to live.
The Island's greatest exports were flowers and tomatoes when I was growing up; it now looks like it is 20 - 30 year olds.
Housing and the delivery of it is not just for keyworkers. If we learned anything from Covid, it is that there was no such thing as unskilled labour; all workers are important, all of our sons and daughters need an Island that they can call their own and I would encourage government not to forget who built this Island and our obligation to ensure that all Islanders have a future here. To be clear, we need more affordable housing and private housing.
Conclusion
In conclusion, there is much to be positive about. The economy has recovered strongly post Covid and the finance sector is showing strong economic growth and a very solid pipeline of new business. The Committee is investing in air route development and is working closely with Jersey to secure the Island's sea links. The tourism sector is recovering well relative to our major competitors.
There are challenges, not least in terms of access to housing and the availability of labour, and in terms of access to some banking services for local residents and businesses, but the Committee is proactively tackling these challenges and is working jointly with other Committees to find solutions.
I look forward to answering any questions that Members may have.