Normality on the Isle of Man, the pandemic yet to impact economic data on the Rock and a fiscal surplus in Guernsey is timely

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The Isle of Man has no remaining active cases of coronavirus. Twenty-four people have died on the island but the last positive case of the virus was recorded on 20 May.

The island became the first place in the British Isles to scrap social distancing and lockdown restrictions. Since 15 June islanders have been able to visit pubs, restaurants, shops and gyms and children returned to school.

Whilst travel to the island remains largely prohibited, a Guernsey and Isle of Man ‘air bridge’ will operate from July. Travellers between the islands, which are both currently Covid-19 free, will not have to self-isolate.

Economic data to May 2020 reflects the impact of the pandemic on the Island although unemployment eased slightly compared with April 2020. The rate for May 2020 was 3.0%, a drop of 0.1% from the previous month.

On inflation, as measured by the Consumer Price Index, the rate stands at 0.1% for May 2020, down from 0.8% in April 2020. Three main sectors contributed to the decrease, clothing/footwear, transport, and housing/water/electricity/gas/other fuels.

Gibraltar

At the end of June there were no known active cases of COVID-19 in Gibraltar. The Territory has had 174 confirmed cases of COVID-19 and no deaths at all. Gibraltar has largely returned to normal including open bars (with some restrictions) and limits on the size of private gatherings.

There is little data on the impact the pandemic has had on the Rock’s £2.3bn economy, with the latest figures showing unemployment (Dec 2019) at an all time low of 40 and inflation (Jan 2020) barely moving to 1.1%. The latest GDP figures (2018/19) showed the economy grew at 5.9%. Gibraltar’s GDP is calculated annually.

An indication of the impact, however, is given by the number of passengers and crew from cruise liners who disembarked in May 2020; nil compared with 36,000 in May 2019. Revenue from the Upper Rock tourist sites for example, was c£600K in April 2019 compared with c£90K in March 2020.

This month Chief Minister Fabian Picardo confirmed that the Rock had had virtually no income for c3 months and had tripled its expenditure.

He stated the Government had drawn down £90m from a £150m facility arranged with the Gibraltar International Bank.

In his Emergency Budget in March, the Chief Minister said the Government would borrow up to £500m in order to put in place measures to protect local businesses and deal with the Covid public health emergency.

Mr Picardo said the Government preferred debt as it would earn more on its reserves than it would pay in interest on this borrowing.

Channel Islands

At the end of June there were no known active cases of COVID-19 in Jersey and in Guernsey.

 Economic data has now begun to reflect the impact of the pandemic on the islands.  

The total number of people registered as seeking work in Jersey in June was 2,050. This is 70 lower than a week earlier but 1,220 higher than at the end of the comparable week in 2019.

In Guernsey during the week ending 30th May, 5.2% of the workforce (1,631 workers) were wholly unemployed compared to 5.0% at the end of April and 1.6% at the end of March. During April 2020, the total number of people registered unemployed reached a peak of 2,374 (7.5% of the workforce).

A ‘revive and thrive’ recovery strategy from the coronavirus pandemic has been published by the Guernsey government. Currently the States has agreed to invest up to £650m of which a £225m short-term borrowing arrangement has been agreed with local banks.

Economic modelling has projected a loss of c£300m to the economy in 2020, 8% of the total, which could take 10 years to recover from without fiscal stimulus.

Key initiatives will be completing the review of air and sea links, including clarifying state owned airline Aurigny’s role as an ‘economic enabler’; investing in infrastructure and regeneration projects; reviewing the population management regime to enable recruitment of skilled workers and overhauling telecommunications infrastructure and reviewing 5G provision

The future position of Aurigny was already under review after the company announced losses of £7.6m last year, about £3m higher than previously forecast. Overall the airline received a £9.7m bailout from the States.

Guernsey’s finances were in good shape prior to the pandemic after a £105.6m surplus in 2019 was reported in government accounts. This represented a significant improvement from a 2018 deficit of £16.2m. The turnaround was due to investment returns of £86.3m and a £25.6m increase in tax revenue.

Guernsey has built up £195m in government reserves, £100m of which will be used to fund the recovery alongside the £550m in borrowing as stated above.

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