Economic recovery gives cause for concern

Thursday 28 May 2020

A number of businesses within the finance sector are said to be concerned about cash flow and reduced profits this year with GIBA highlighting concerns over the island's economic recovery post lockdown.

The Guernsey International Business Association said it welcomes the move to phase 4 of the exit strategy this weekend, but its Chair said support must continue for the many businesses which have been impacted by the pandemic.

Tony Mancini said economic recovery is a worry for many in the sector.  

Pictured: Tony Mancini.

"The decision to move to Phase 4 of the exit strategy, several weeks ahead of when many expected, is great news, especially for those local businesses that can start to trade again. The reopening of the schools from 8^th June is particularly welcome.  As well as being so important for the long term wellbeing of our children, working parents will be pleased to get back to a normal working pattern. This is all good for the wider business sector.

"GIBA also welcomes the acknowledgement that we need to address how we can start to reopen our borders safely to the outside world. This is a vital step to economic recovery.

"It is the need for economic recovery that gives us concern. We have been talking to many businesses about the current and future impact of the COVID-19 measures on their operations. Whilst many finance businesses have been fortunate to be able to operate substantially as normal, this is not the case across the whole sector."

GIBA said there are many businesses that are being adversely affected now or which have shown concerns about the immediate future. Cited examples include:

●       Around a quarter of businesses are experiencing cash flow problems now;

●       Many expect to see sales to reduce by over 10%;

●       Almost half of businesses expect profits to be hit by 20% or more this year.

Mr Mancini said these messages are concerning for the island as a whole. 

Pictured: A large number of Guernsey's finance firms remain based in St Peter Port. 

"The finance sector directly accounts for around half of GDP, so reductions of revenues and profits in finance will impact on tax revenues for the island. With the massive increase in expenditure for business support and wider mitigation measures, it is not sufficient to seek to simply return the economy to pre-COVID levels, we need to drive growth to compensate for lost revenues and to fund public services. 

"This will require the States of Guernsey and business to work in partnership for the good of the island. This means support for and promotion of the finance sector, which must also include finding ways of opening our borders safely and engaging with the global community."