Guernsey's economy is showing signs of good health, reports the States of Guernsey this week. Following two years of relatively strong real GDP growth in 2016 and 2017, secondary indicators suggest that growth has continued through 2018 and the first quarter of 2019.
However, it appears likely that, when official first estimates of GDP for 2018 are published later in the summer, the rate of growth for the year will be a little slower.
The total number of people employed in Guernsey continues to increase, with 0.6% more people employed or self-employed in December 2018 than at the same time the previous year. This is a slower rate of growth than the average for 2017 and the statistics suggest that net immigration, rather than increases in participation rates, is currently the key source of employment growth in Guernsey.
Low unemployment and high rates of participation have begun to translate into real earnings growth, with median earnings increasing by 0.9% over the year ending December 2018.
Immigration levels
Levels of net immigration have increased, with a net inward movement of 390 people in the year ending June 2018. This means the Guernsey population is now growing after a period of decline, but it is still more than 500 people short of the population peak in June 2011.
With a return to population growth, the housing market has stabilised and shown more definite signs of recovery. The increase in the number of local market transactions reported during 2018 has held in the first quarter of 2019 and house prices have begun to increase in real terms after about four years of house prices failing to keep pace with general price inflation.
Rental prices have followed a similar pattern, and as a result the cost of housing in Guernsey has come down relative to median earnings. While still expensive compared with most areas of England and Wales (on a par with the South East and areas of London), both ownership and rental in Guernsey have become a little more affordable than in the past.
States of Guernsey accounts 2018
The States of Guernsey accounts for 2018, also released this week, show a general revenue surplus of £66.4m, slightly more than the figure budgeted for.
This is down to a slightly better than expected return from some sources of revenue, including ETI receipts as well as the States of Guernsey achieving its Budget targets for limiting expenditure.
While overall the Policy & Resources Committee reports a net underspend of £1.6m for 2018, there have been challenges as several individual committees have overspent. The result is an unallocated surplus of £9.7m. This is more than was budgeted for, but significantly less than the equivalent figure for 2017.
2018 delivered less welcome results in terms of the States' investments compared with 2017. There was a net investment loss (largely unrealised) of £19.8m compared with a return of £61.4m in 2017, though this is not seen as cause for alarm given the long-term nature of the investments.