Money makes the island go round – so spend it
Monday 9th February 2009, 2:30PM GMT.
HEALTHSPAN chief executive Derek Coates has made a rallying call to local businesses to get behind one another.
Speaking at the 2008 Awards for Achievement, while presenting his company’s award for best large business, he warned guests to expect there to be fewer companies in operation in the near future than at present.
However, he said the situation could be much worse if businesses did not start spending again – and spending locally.
‘We are all interdependent on each other,’ said Mr Coates (pictured).
‘When we spend money it circulates in the economy and, when it does, it expands.
‘Spending in our island must increase now. Early spending now is by far the most important thing we can do than to leave it until later, when some companies will already have gone to the wall.’
Mr Coates said Guernsey would not escape the recession and downturn but predicted there would be a time lag from what was being experienced elsewhere.
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Respect to Mr Coates. Commendable.
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Surely then, if keeping money in our local economy is so fundamental to the success of a business then why do we (as an Island) employ so many migrant workers who earn their money and then ship it back to their family elsewhere in the world?
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While I have some sympathy for Mr Coates’ view, the concept of the paradox of thrift is well known, the island’s economy is wholly dependant on the rest of the world. So Healthspan might sell fewer vitamins, Specsavers fewer pairs of specs, and Guernsey plc fewer trusts, companies and funds under management and so on. But if these external income generators Healthspan/Specsavers etc. spend cash locally and employs staff, accountants, advertising execs etc. this may help the Guernsey economy in a limited way but will have a significant impact on the profitability of the income generators and is unlikely to be sustainable in the long run.
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