Economy could avoid a double-dip recession, according to market outlook event

Tuesday 09 February 2021

The Channel Islands are better placed than many other jurisdictions in dealing with the ongoing economic risks and uncertainties brought about by the pandemic and Brexit, attendees at a market outlook webcast have been told.

More than 120 people in Guernsey and Jersey attended EY’s ITEM Club Winter Forecast for the Channel Islands.

When asked how they felt the Channel Islands’ economies have been impacted in relation to the UK’s, 94% of respondents felt the Channel Islands have been less impacted than the UK, with 70% of respondents either agreeing or strongly agreeing that the Channel Islands will be more attractive places to live and work post-covid.

The session was led by Martin Beck, EY’s Senior Economic Adviser from ITEM Club. 

“The Channel Islands have performed well internationally in responding to the public health challenge of Covid," he said. But this has not left Jersey and Guernsey immune to the pandemic’s economic damage.

"As the latest EY ITEM Club report sets out, the economies of the islands look to have suffered an unprecedented hit last year, and the risks around a hoped-for recovery this year are plentiful. But the rollout of vaccines offers the prospect of some return to normality as 2021 progresses. Pent-up demand, high levels of households savings and a global economic rebound should all aid the Channel Islands in repairing Covid’s economic damage."

Pictured:  EY’s Channel Islands Managing Partner Andrew Dann said the early indications from the report suggests that the Channel Islands are fairing relatively well. 

The webinar was hosted by Andrew Dann, EY’s Channel Islands Managing Partner. 

“Whilst there are always uncertainties with forecasts, this year even more so than usual, early indications from the report suggests that the Channel Islands are fairing relatively well," he said.

"Although both islands’ tourism and hospitality industries have been significantly impacted, the size of our financial sectors, which have the digital and remote working capabilities to quickly and efficiently adapt to change, have proved to be pivotal in protecting the local economies.

"When participants on our webcast were asked how much of their additional savings they have accumulated during the crisis they would be likely to spend once restrictions began to lift, 60% said they would spend some, or most, of their extra savings, which is positive news for the islands’ economies as local businesses look to bounce back.” 

Some of the main takeaways were that: 

• The EY ITEM Club forecasts UK GDP contraction of 3-4% quarter-on-quarter in Q1 2021, then improvement from Q2 onwards;

• No contraction is expected to have occurred in Q4 2020, despite tighter Covid-19 restrictions;

• Following a better-than-expected 10.1% GDP contraction in 2020, the EY ITEM Club forecasts growth of 5.0% in 2021, 6.5% in 2022, 2.0% in 2023 and 1.8% in 2024;

• UK economy forecast to regain pre-COVID-19 peak in Q3 2022, sooner than the 2023 and 2024 dates predicted in earlier forecasts.

Pictured top: The session was led by Martin Beck, EY’s Senior Economic Adviser from ITEM Club.