Economic Growth

Statistics show it's the island's main employer right now (albeit in direct competition with the Civil Service for that honour), directly employing 17.7% of the workforce as at 2024 and responsible for considerable indirect employment. It's the cornerstone of Guernsey's economy, contributing £1.3 billion to the economy in 2023 and accounting for 37% of the total GDP. 

WITHOUT IT, GUERNSEY IS IN TROUBLE. And yet the sector is facing major contraction. If this happens, we will see lower headcount and relocation of businesses off-island; put bluntly, a declining contribution to GDP and public finances will result in a poorer economy. 

• Talent leaves: Skilled finance professionals will move to Jersey, London, Dublin, or beyond.
• The economy narrows: Without finance pulling its weight, no other sector is currently large enough to fill the gap.
• A slow spiral begins: As revenues fall, infrastructure declines, investment dries up and confidence ebbs.

What We Must Do

• Reignite the sector: Ask more of finance — we must put innovation and growth front and centre, not just compliance and administration.
• Leverage Guernsey’s excellence: Guernsey is world-class at managing venture capital and alternative assets and in stewarding new, niche and emerging strategies; the industry must be allowed to pursue these avenues without regulatory creep.
• Make it easier to grow here: Reduce the friction. Streamline planning, licensing and regulatory processes that currently stall ambition. A well-regulated jurisdiction doesn’t have to mean a slow or risk-averse one.
• Attract future-ready sectors: Grow finance by inviting its natural next chapters: e.g. fintech, regtech and AI services — sectors that align with our values and global standing.

Guernsey must adopt a pragmatic and open commercial risk appetite, aimed at fostering innovation and attracting high-quality businesses. This policy will reset the relationship between Guernsey and the Guernsey Financial Services Commission (GFSC), ensuring the GFSC can focus on its role as a supervisor, not a policy setter, and creates an environment that encourages growth and investment.

Guernsey will embrace calculated risks in emerging sectors while maintaining the island’s reputation for stability and financial integrity.

1. Fostering Innovation: Guernsey welcomes investment in emerging sectors - a moderate, well-regulated risk appetite will enable us to capitalize on global opportunities while ensuring high-quality business practices.
2. Balanced Approach to Risk: Zero-risk policies stifle growth. While financial stability and prudent oversight will always be key priorities, Guernsey will accept appropriate risks in areas with high growth potential, positioning the island as a global leader.
3. Revised Role for the GFSC: the GFSC can focus on its core function of supervision, ensuring that businesses comply with rigorous regulatory standards, but will not set policies that unduly restrict innovation. Clear frameworks will be established to ensure a conducive environment for business.

Cost Impact: Minimal
(Any cost will be capable of being covered by reallocating existing government resources and leveraging expertise from the private sector, ensuring no additional cost burden to taxpayers.)

1. Leveraging Local Expertise can result in informed decision-making through engaging local finance industry experts to assist in shaping the regulatory framework and advising on risk appetite management, without additional fees.
2. Public Engagement & Communication can be managed within Guernsey Finance’s existing budget by utilizing current resources and expertise, ensuring that no additional cost is incurred.  
3. Ongoing Monitoring & Tri-Partite Review can be established by involving industry, regulator, and government to assess the effectiveness of the policy. This will be cost-neutral, with participants giving their time as part of their existing roles or voluntarily, eliminating additional costs. If external reporting is required, the costs will be shared equally between the three parties, ensuring no one party dominates the terms.

Timeline for Implementation

• Immediate Steps (Months 1-3):
  • Release the Risk Appetite Statement and communicate clearly with the GFSC, businesses and the public about the shift in approach.
• Medium-Term Goals (Months 4-12):
  • Launch monitoring and reporting mechanisms, creating transparency around the policy’s impact on high-risk sectors.
• Ongoing Review:
  • Regular evaluations to assess growth, job creation, and investment levels in sectors aligned with Guernsey’s new commercial risk appetite.

Conclusion

This new policy will reset the dynamic between Guernsey and the finance industry, encouraging investment in high-quality business ventures while ensuring that risks are carefully managed. By removing barriers to innovation and leveraging local expertise, we can implement the policy without increasing the tax burden, ensuring Guernsey remains competitive in established markets and growth sectors.

Guernsey must create a supportive, flexible environment for entrepreneurs and start-ups in emerging sectors in order to pursue diversification of industry for the longer term.

Key Strategies for Cost-Neutral Implementation

• Streamlined Regulatory Framework: use existing frameworks to simplify regulatory processes for start-ups. No new budget allocation is needed—this can be done within current regulatory budgets by focusing on reducing red tape, particularly for sectors like fintech, creative industries and green technology.

• Sector-Specific Innovation Hubs: encourage the development of sector-specific innovation hubs where start-ups can collaborate, share resources and network. These hubs can be established through existing co-working spaces or partnerships with local industry associations, ensuring no new infrastructure costs. 

• Access to Funding Through Existing Channels 
  • Innovation Board Funding: leverage funds already provided to the Innovation Board and direct them toward facilitating early-stage investment and seed funding for start-ups. This approach reduces the need for new financial allocations.
  • Government-Private Sector Co-Investment: introduce co-investment opportunities where the government matches private investments in high-growth sectors, ensuring that the cost burden is shared equally between public and private sectors.
     
• Mentorship and Networking Programs
  • Mentorship: tap into the existing pool of successful business leaders and sector experts to offer mentorship programs to entrepreneurs. Many of these experts will offer their time on a voluntary basis or as part of their existing roles within the industry.
  • Networking Events: partner with industry bodies to organize start-up networking events or pitch sessions, utilizing existing event spaces and resources. These events can be sponsored by private companies, reducing the need for public funding.
     
• Talent Attraction with Minimal Investment: encourage entrepreneurs and skilled workers from outside Guernsey, alongside those available on-island, by streamlining existing work permit programmes and making them more entrepreneur-friendly, without adding new infrastructure or costs or making the housing crisis worse, especially for those businesses that can create new employment opportunities on-island.
   
• Digital Infrastructure Utilisation 
  • Build upon existing digital infrastructure, ensuring that high-speed broadband and cloud technologies are leveraged by new start-ups. Rather than additional investment, prioritise public-private partnerships to expand access to digital tools for start-ups.
     
• Impact Assessment: use existing economic development resources to assess the impact of the policies on the growth of start-ups in key sectors, such as job creation and sector investment, to ensure that the policy is meeting its objectives. This evaluation can be done by leveraging expertise within the government and industry bodies.

Guernsey must be better prepared for the AI and technology-driven future. It is essential we do more to prioritise the development of robust energy and broadband infrastructures across the island to ensure that both existing sectors and emerging industries are equipped to leverage advancements in artificial intelligence, data processing and digital technologies.

• Ambitious Infrastructure Enhancement
  Utilities, including broadband and energy, must be required to implement forward-looking infrastructure enhancements. These upgrades will be driven by the rising demand for high-speed internet, AI integration, and tech-enabled services, and yet Guernsey doesn't feel ready.
   
• Strategic Coordination for Minimal Disruption
  Utilities will be encouraged to develop collaborative, phased upgrade plans that are strategically coordinated to avoid unnecessary disruption to residential and business customers.
   
• Efficiency and Cost Management
  Deliver high-quality upgrades with a focus on cost efficiency, keeping the burden on consumers to a minimum. Where possible, utility companies will be encouraged to share the costs of infrastructure projects across sectors or to use public-private partnerships to fund certain enhancements.
   
• Funding and Financial Support
  Efforts will be made to explore subsidised funding or cost-sharing arrangements to keep any necessary rate increases or funding contributions as low as possible. Any increases in consumer costs related to infrastructure improvements will be closely monitored to ensure they remain justifiable and equitable.

• Regular Monitoring and Reporting
  A monitoring framework will be established to track the progress of these utility enhancement programs. Regular reports will ensure that projects are on time, on budget, and meeting the intended quality standards, with adjustments made if any negative impacts on consumers or businesses arise.

• A Competitive, Future-Proof Island: Guernsey will be equipped with the best-in-class digital infrastructure, ready to embrace future technologies like AI, allowing it to become a leader in tech innovation while supporting the needs of both existing industries and emerging sectors.

• Uninterrupted Access to Services: Guernsey's businesses and residents will experience minimal disruption while upgrading essential services, ensuring continuous access to critical digital infrastructure.
   
• Affordable Tech-Enabled Economy: The policy will ensure that enhancements are achieved with minimal impact on consumers’ financial well-being, keeping costs manageable.
   

This policy will position Guernsey at the forefront of the digital and AI revolution, providing the island’s businesses, entrepreneurs and residents with the tools they need to innovate, grow, and compete in the global marketplace, all while ensuring that the economic impact is balanced and fair.
 

Government must take proactive steps to drive meaningful cost savings and ensure spending prudence throughout the next term and beyond. By critically assessing current budgets, the government should focus on identifying efficiencies and eliminating unnecessary expenditure, aiming for annual savings of at least £10 million. This can be achieved through streamlining processes, leveraging existing resources and prioritizing high-impact investments. The result will be a more sustainable fiscal approach, ensuring that public funds are used effectively and that future generations are not burdened by excess spending. The government’s commitment to fiscal responsibility will build confidence in its ability to manage public finances and deliver better value for taxpayers.

1. Comprehensive Spending Review: conduct an urgent, full-scale review of current public spending across all government departments, agencies and public services. The review will focus on understanding where costs are necessary, where expenditure is inefficient or excessive and where there are opportunities for improvement. The review will specifically look for areas where there is duplicated effort, over-spending or outdated practices that no longer deliver value for money.
 

2. Criteria for Cost Evaluation: each expenditure must be assessed against the following criteria: 

• Reasonableness: Is the cost justified based on the service provided, its priority and its impact on the community?
• Waste: Are there opportunities to reduce or eliminate wasteful spending without compromising service delivery?
• Potential Tweaks: Are there adjustments that can be made to optimize the existing spend, such as process improvements, outsourcing or automation?
  

3. Departmental Accountability: each government department must be tasked with reviewing its own budget and proposing cost-saving measures, with the expectation that they will identify a minimum of 5% savings in their annual budgets. Internal teams will be designated within departments to ensure robust accountability for meeting cost-saving targets and reporting on progress.
 

4. Engagement with Stakeholders: engage external sector experts and industry bodies to provide insights into potential cost-saving measures, particularly in areas like procurement, technology and service delivery models. Public consultations will be conducted to gain feedback on potential areas of inefficiency or waste, allowing for greater transparency in the review process.
 

5. Efficiency Targets and Savings Implementation: set a clear, measurable target of at least £10 million in annual savings, with an emphasis on achieving immediate, actionable savings while laying the groundwork for longer-term efficiency gains, which may include: 

• Digitizing services and reducing reliance on paper-based systems.
• Renegotiating contracts with suppliers to achieve better value for money.
• Consolidating services across departments or agencies where overlaps exist.
• Reducing non-essential spending and revising service delivery models to focus on core priorities. 

6. Ongoing Monitoring and Adjustment: establish a framework for ongoing monitoring and adjustment of public spending to ensure continued alignment with cost-saving goals. A dedicated oversight team (identified from existing headcount) should track the impact of the policy and make recommendations for further efficiency improvements. Regular budget reviews should be conducted to ensure that savings are consistently realised and that funds are allocated to areas that maximize public benefit.
 

7. Transparency and Public Engagement: ensure transparency throughout the process, with regular updates provided to the public on the savings identified, measures implemented and results achieved. Encourage public involvement through open channels for feedback and suggestions, ensuring that the review process is inclusive and reflective of community needs.
 

• At least £10 million in annual savings from current budgets, achieved through cost-efficiency measures and the elimination of wasteful spending.
• Streamlined government operations with a focus on value for money, ensuring that every pound spent delivers measurable results.
• Improved public trust in the government's ability to manage taxpayer money efficiently and effectively, creating a foundation for future financial sustainability.
• A culture of continuous improvement, where departments are regularly encouraged to identify and implement cost-saving measures that ensure the long-term fiscal health of the government.
   

This policy sets the foundation for a focused, urgent review of public spending, ensuring that unnecessary costs are eliminated and efficiencies are realized. By targeting realistic and achievable savings, this policy will contribute to a more sustainable and responsible approach to government finances, positioning the government to better serve its citizens while ensuring that public funds are used in the most effective way possible.