Recovery means being different
Wednesday 25th September 2013, 4:00PM BST.
IF THERE is such a thing, Guernsey has had a good recession, certainly as benchmarked by many other – and close – jurisdictions.
The question, however, is when it will end.
Recovery is at hand, says the Bank of England’s central southern agent, who was providing an annual presentation to an invited audience locally on the state of the economy.
But again, the question is when the improving conditions experienced in the UK start to wash over here, something that can take 12 to 18 months if previous economic downturns are anything to go by.
It’s certainly a concern to the business leaders who reacted to the Commerce and Employment minister’s incautious remark that Guernsey’s economy is ‘buoyant’. It was left to an official subsequently to add the all-important ‘relatively’ (and then only in comparison to those who are really suffering).
So what businesses here really want to know is when the recovery will arrive. And, more importantly, what it will look like.
Previous levels of growth and income are unlikely. As the Guernsey Financial Services Commission noted in its annual report, there has been a shift among developed economies of attitudes towards tax evasion and avoidance and this ‘makes jurisdictions such as Guernsey especially vulnerable to criticism, let alone countermeasure’.
While the UK has now acknowledged that the island is not a tax haven, the trickle-down benefits of financial services will have to be provided by a sector that is now more on- than offshore and the same commission views the internet as a threat rather than an opportunity.
While that persists, Guernsey is facing doing more of the same in a competitive environment while its costs, particularly of regulation, rise and it has little to differentiate itself.
At the same time, the island’s chief minister was downplaying Jersey enthusiasm for merged or shared services and he and his ministers have yet to demonstrate that government has slimmed and reformed to meet the demands of the economic new normal.
In short, what the recovery looks like will largely be dictated by how entrepreneurial and creative policymakers and regulators are.
‘Same old…’ will not do.