“We can no longer take our economic success, standard of living and quality of life for granted”

Friday 13 October 2023

A new report from a big four accountancy firm has advised on what small island states need to do in the coming decades to foster economic growth, saying government and business must act, and fast.

PwC has published a new “Island Index” which calls for investment in infrastructure, skills, people and environmental protection to deal with the challenges ahead.

The analysis includes encouraging more women into work and incentivising working longer to counter the projected decline in the working age population by 2050. 

It recognises migration could help, but may be politically difficult and pile additional pressure on limited infrastructure capacity. 

The islands should capitalise on the net zero transition, but changes will be needed to financing and upskilling in relation to this.

While the islands enjoy high earnings per head, this and economic growth could fall below international averages if skills and productivity don’t improve.

It said without action, islands like Guernsey and Jersey could be “especially vulnerable” to a slowdown in global economic growth, productivity shortfalls, and technological innovation disrupting demographics, globalisation and climate change. 

But there is “strong confidence” in local institutions which means the necessary policies should be able to be developed. 

Pictured: The report says Guernsey must invest in infrastructure and skills to attract talent and boost productivity.

The Channel Islands should be able to lead on climate action and sustainable investment, noted as key opportunities in the report.

Government should therefore look to protect and grow the finance industry, boost investment in productivity and the green transition, which could also attract global talent into the workforce.

Sustainable public finances also must be agreed, it added.

Businesses should attract the best while also looking to the older generation for staff, and “collaborate to compete” in working towards solving major future challenges.

Evelyn Brady, PwC Channel Islands Partner and Guernsey Office Leader said that “Guernsey is at a crossroads.

“We can no longer take our economic success, standard of living and quality of life for granted as we come up against the disruptive impact of ageing, climate change and slowing global growth. 

“Our ability to compete depends on investment in skills, connectivity and tech-enabled productivity. We also face some tough decisions on migration, public finances and tax policies as declining workforce numbers not only put growth at risk, but also reduce tax income.”

You can read the report HERE.

Pictured (top): James Linder, principal author.