Report Reveals COVID-19 Impact On Economy

Guernsey’s economy has shrunk by 6.6% because of the pandemic.

A new report sets out the significant financial impact that Covid-19, and our response to it, has had on our economy.

The report brings together statistics covering indicators published by the States of Guernsey and the Guernsey Financial Services Commission.

GVA is estimated to down by around 6.6% in 2020.

That is a smaller contraction than the UK is expected to see, and similar to the figure forecast for Jersey in August.

Guernsey’s economy is expected to begin a recovery of between 2% and 5% in 2021. 

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.

Sectors including Construction; Real Estate and Information and Communication suggest evidence of activity levels at the end of September being greater than a year earlier.

That is likely to have been led by high demand for property and the shift towards more remote working.

The report shows the finance sector is showing 'evidence of stress'  - with total employment down 4.9% by Q2 of 2020.

Average (median) earnings in finance have gone up, suggesting its mainly junior positions that have been lost.

£43.7m has been paid to local businesses and self-employed people via the formal business support schemes such as small business grants, payroll co-funding and accommodation grants (as of 20 November)

Almost a quarter of that total sum has gone to the hospitality 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.”