Embracing a bold new digital vision for Guernsey's economy
PwC claims accelerating Guernsey’s digital transformation could add £150M annually and secure future growth with new report.
New research carried out by PwC for the States of Guernsey reveals that the island could boost its GDP by £150 million a year by matching the digital sector productivity of Luxembourg. What actions are needed to boost Guernsey’s digital market, skills, industry and culture to seize this digital opportunity?
Talent, enterprise, stability and trust are hallmarks of the Guernsey economy that have helped drive prosperity and create an enviable standard of living. Yet future prosperity and economic success can no longer be taken for granted.
Blind Spots in the Boardroom: Why local business leaders underestimate the upheaval
As our Island Index research highlights, Guernsey could be especially vulnerable to a range of disruptive trends from slowing global growth and climate change, to an ageing population and the rapid tech transformation. On current trends, our modelling suggests that future economic growth in Guernsey could be weak at best. This is mirrored in the sentiment of local business leaders, who, when surveyed, were the least confident about local economic prospects compared to their peers in other international finance centres.
Despite this, local business leaders are confident about their businesses long-term viability in the face of global headwinds. Whereas globally, three in seven business leaders recognise that their business model won’t be viable in ten years’ time, only one in seven Channel Islands CEOs share these same concerns.
Is this a sign of confidence or complacency? Only time will tell. What is clear from these findings is that a far lower proportion of local businesses are taking decisive action to reinvent their business models when compared to many other international financial centres.
Moving Guernsey onto a growth footing
So how can Guernsey rekindle economic growth? What are the strengths to build on and weaknesses to tackle?
Five drivers for a robust and resilient island economy:
- Environmental stability - Climate mitigation and adaptation
- Connectivity & business dynamism - A connected, innovative and competitive economy
- Confidence and stability - A stable, trusted and forward-looking policy environment
- Human capital - A skilled and flexible workforce
- Adaptable institutions - Agile and responsive governance
In our Island Index report, we identified five drivers for a thriving island economy. Guernsey performs strongly across a number of these drivers including stability, environmental sustainability and confidence in public institutions, compared to other island jurisdictions. Nevertheless, when it comes to skills, connectivity and business dynamism – areas that hold the key to innovation, reinvention and competitiveness – Guernsey is underperforming compared to other island economies such as Jersey, Isle of Man, and Malta. If these weaknesses persist, it would be both a missed opportunity and a threat to the viability of many businesses on the island.
Unleashing the digital dividend
This need to step up the pace of business reinvention and dynamism is why digital innovation and transformation are so critical to Guernsey’s economy.
In PwC's report, prepared for the States of Guernsey, we look at how accelerating digital transformation would not only help to meet and mitigate today’s disruptive challenges, but also enhance living standards and strengthen the economic sustainability of the Bailiwick. The research draws on both our economic modelling and an in-depth survey of 91 Guernsey organisations.
Encouragingly, our research reveals that solid digital foundations are already in place. Guernsey’s digital sector generates more than £120 million a year and over 10% of the workforce are employed in either digital roles or in digital sectors like telecoms, software development and IT consultancy. This is a much larger digital footprint than many might have assumed, reflecting the island’s strengths in digitally-intensive sectors such as financial and professional services.
The untapped potential is even greater. Currently, the economic value of Guernsey’s digital sector, in terms of gross value added (GVA) per employee, is notably lower than many comparable jurisdictions. Bringing our digital sector productivity per employee in line with those in Luxembourg, for instance, could boost the economic value of the sector from approx. £120 million to £270 million. These differences in sector productivity are partly driven by the nature of work in Luxembourg, where there is a concentration of digital head office and IP functions, as well as deep digital skills, infrastructure and an internationally mobile workforce.
We all have a part to play
How then do we realise Guernsey’s digital potential? A starting point could be a collective vision for the future. The timing is pressing as the existing Guernsey Digital Framework runs till 2025. We therefore urge Guernsey’s incoming government and policy making committees to move forward with a collective vision for its future economy. The recently launched Innovate Guernsey Board is a really positive move in that direction.
Our report goes on to outline priority actions to boost Guernsey’s digital market, skills, industry and culture:
Digital Market
- Update and promote a bold digital strategy for Guernsey, focusing on e-Government and tech-enabled services.
- Strengthen partnerships between government, business and education to drive innovation and expand internships.
- Enhance support services and reposition promotional efforts to highlight Guernsey’s digital economy strengths.
Skills
- Work with educators and industry to bring digital literacy into schools, boosting confidence in job-ready skills.
- Develop a clear ‘digital skills escalator’ to tackle gaps and support workers at risk of digital disruption.
- Launch inclusive campaigns to inspire people of all backgrounds, ages and genders to explore careers in the digital economy.
Industry
- Review, invest and expand the remit of the Digital Greenhouse so that it works in closer partnerships with businesses to support and drive growth while aligning to the island wide digital economy vision.
- Establish a dedicated government body to coordinate digital efforts across sectors and champion innovation.
- Offer grants and incentives to boost research, ideas and productivity-enhancing innovation.
Culture
- Make Guernsey an attractive destination for tech talent by streamlining housing licensing and promoting the island’s digital potential – learning from the successes of other tech centres.
- Foster a supportive regulatory environment that encourages joint ventures and highlight initiatives like the Innovation Soundbox as a fast-track route to market – e.g. working with regulators, including the GFSC to create controlled environments where companies can develop, test and scale new solutions with supportive regulatory oversight.
In short, Guernsey’s digital economy is larger than thought and is geared to support the wider economy. But it could be more than this, and with the right investment, support and focus it has the potential to drive the island's economic growth. The time to act is now. As we have seen in our Boosting the Channel Islands Workforce report, Guernsey's ageing population will increasingly be a drag on prosperity; investing in a thriving digital economy could help alleviate this and yield a much needed digital dividend
