The COVID-19 pandemic has had a grave impact on jurisdictions worldwide, including the Bailiwick. While the pandemic has first and foremost presented a public health crisis, the necessary emergency measures that governments have instituted to stem the spread of the virus now threatens the global economy and community well-being.
Governments have invoked wide reaching powers to isolate their populations, which has brought large sections of their economies to an almost complete standstill. The international airline fleets sit largely redundant on airport aprons; oil prices have tumbled as demand has fallen to a record low; and unemployment has soared. Financial markets have not been immune; in March 2020 the FTSE 100 posted its biggest quarterly fall since the Black Monday crash in 1987.
Unparalleled economic support by way of wage subsidies, specific sector and employer support, liquidity support and new social benefits have been introduced by many governments in order to help their communities through the crisis. Global economies are in uncharted waters and analysts and economists are now forecasting a profound economic downturn in the short term with long term consequences.
Guernsey has been fortunate in that the finance sector has only been minimally impacted by the crisis, to date, which has kept a significant proportion of our population employed and in a position to begin spending again as restrictions lift. However, the Bailiwick will not be immune to the global economic crisis, albeit that the full impact may be delayed.
Several sectors of the economy, such as tourism, hospitality, aviation, retail and construction have been, and continue to be, severely affected. Some employers have responded to the social restrictions by adapting their operating models but, nonetheless, unemployment has increased sharply.
The Bailiwick is now at the stage where emergency restrictions are gradually easing as part of the planned phased exit from lockdown. Data from previous pandemics, and the experience from other jurisdictions in relaxing their isolation measures, show that second peaks of infection (leading to further lockdown restrictions) are a real possibility. While the virus has not yet been detected in Alderney, Sark or Herm, these islands have not been immune from the impact of the emergency measures and will feel their socio-economic consequences.
There is some way to go before the resumption of business-as-usual. Indeed, what was business-as-usual for the Bailiwick, and elsewhere, may never be the same again as employers, individuals and the public service adapt to the post-pandemic reality.
Economic modelling for the impact on the Guernsey economy in 2020 predicts a loss of GVA of an estimated 8% in real terms (based on the current accelerated exit from lockdown). This is a very significant recession, equivalent to the loss of more than 10% of the workforce over the course of the year. For context, the 2008 global financial crisis resulted in a loss of 2.6% of GVA.
We are managing a progression out of lockdown with greater pace than was predicted. We also have robust public health measures in place to manage a second peak of infections. However, modelling also shows that the requirement to return to a lockdown state would have a material negative impact on output.
Managing the socio-economic consequences of the public health protections will be critical as the Bailiwick moves from pandemic crisis to recovery. We therefore need a single Recovery Strategy to take the community, employers and the government forward in an inclusive way and sets out a shared vision and overall approach to recovery.
The full Recovery Strategy document can be found below.