Deputy Gavin St Pier – Guernsey’s former chief minister, who received widespread praise for his leadership throughout the pandemic – made the comments in reference to the latest reports from global credit agency Standard and Poor’s, which have indicated that the northern island suffered only slightly more economic damage than Jersey last year and is likely to recover faster this year.
The report says Guernsey’s economy shrank by 8% last year compared to an estimated 7.7% for Jersey. However, it predicts that the former’s economy will grow by 4.8% this year, compared to an expected figure of 3.2% for Jersey.
Deputy St Pier said he was not at all surprised by the data, despite the different approaches taken by the two islands in tackling the virus.
He added that he believed Guernsey’s economy had actually been boosted by residents being less able to travel and, instead, spending money locally.
The Deputy spoke to the JEP before Guernsey went into lockdown this weekend following a number of unexplained Covid cases.
‘All the evidence is of a very strong domestic economy on the back of a population that has largely been unable to do anything other than consume locally, because of the travel restrictions,’ he said.
Deputy St Pier added that many sectors of the economy, businesses from plumbers and kitchen fitters to those selling new cars, had prospered because ‘rather than taking a holiday in the Maldives people are redecorating their house etc’.
‘All of that absolutely supports a strong rebound, with the exception of travel providers and ferry companies and those providing accommodation for visitors,’ he said.
Jersey opted for a more balanced approach to the virus, including the reopening of its borders in July and allowing more people in and out of the Island.
However, the Deputy said that he was always ‘confident’ that Guernsey’s strict approach would prove to be beneficial for his island.
‘What became clear is that there isn’t a trade-off between public health and the economy,’ he said. ‘International coverage seemed to suggest that there is a balance to be struck, but we realised that you can’t manage the economy without having a handle on the public-health side of things.
‘If you get the public health bit right, then the others – mental health, community life and the economy – will all follow. They are all interlinked, so with a degree of confidence around the public-health response you can then have confidence around the other bits.’
At the time of writing, Guernsey had fewer than ten active coronavirus cases. When asked what he thought had helped to produce that result, the Deputy pointed to the strict border controls introduced in March and the lockdown that quickly followed.
‘It wasn’t an elimination strategy but I think the two decisions that we took – an early border closure and then the early lockdown – were the key to success,’ he said.
Speaking to the JEP for last week’s Saturday Interview, Chief Minister John Le Fondré rejected the assertion that Guernsey’s approach had been more successful.
He defended Jersey’s strategy and said that each decision had been taken following consultation with ministerial colleagues, medical professions and political advisers.
‘It has been a collaboration,’ he said. ‘It is about leading a team with disparate views and leading them through discussions and, generally, getting to a consensus.
‘There are times where we have to agree to disagree. Some people may regard that approach as a weakness – I don’t.’
The Standard and Poor’s reviews also outlined risks to the economies of both islands in the shape of the UK becoming a rival financial services centre in the post-Brexit environment.
This week it was reported that UK Prime Minister Boris Johnson would like to turn the UK into a low-tax, low-regulation ‘Singapore-on-Thames’ finance centre.
‘Jersey is exposed to any potential changes in taxation and regulation for the UK financial sector, which could render the UK more competitive than the Crown Dependencies,’ the S&P report on Jersey says.
Additionally, the report noted that both islands’ governments held substantial cash reserves, estimated at 135% of GDP [the size of the economy] in Jersey and 105% in Guernsey, leaving the two of them in good overall financial positions.
It also outlined that Jersey currently had less debt (5.4% of GDP) than Guernsey (13.3%) but this would soon be reversed, with the former due to take out a £385 million loan, this year alone, to pay for the costs of the pandemic.
S&P estimates Jersey’s debt will increase to 12.6% of GDP by 2024, while in Guernsey the same figure will drop to 11.6%.
