Guernsey Finance: funds adding £13bn to UK economy

Posted: 29/01/2024

Research by European consultancy Frontier Economics has highlighted the contribution of Guernsey’s finance sector to the UK economy.

Key findings

• Guernsey-based funds channel significant investment into the UK economy, and currently hold UK assets worth £57bn.
• Guernsey-based funds’ capital investment into UK assets has increased by 14% per year since 2020 – as total foreign direct investment into the UK falls.
• UK fund managers generate £2bn of fees annually from Guernsey-based funds – income that generates additional tax revenue for the UK, as well as a social value of £3-4bn every year for the UK.
• UK FTSE 100 companies may collectively save almost £100m per year by using Guernsey captive insurance structures.
• Guernsey international pensions generate approximately £30m per year in total for UK professional services firms and investment managers.

Currently, Guernsey-based funds hold UK assets worth £57bn. The report shows a significant proportion of this investment into the UK would not have occurred if these funds were domiciled elsewhere.

The findings also highlight that UK fund managers are generating more than £2bn of fees from Guernsey-based funds annually, generating additional tax revenue for the UK. 

Rupert Pleasant_oct21Competitive edge

In addition, the island has significantly helped the UK investment management sector become more competitive and more efficient, as well as giving them access to new clients.

Guernsey’s finance sector provides more than £3bn social value to UK. Aligned with UK policy, Guernsey funds are supporting small and rapidly growing businesses in the UK as well as investing in infrastructure such as green power generation assets and facilitating improvements to the housing stock.

According to the research, Guernsey’s insurance, pension and private wealth sectors also have a positive impact.

The island is Europe’s largest domicile for captive insurance. This leads to insurance business flowing through London’s wholesale insurance markets which, without the island’s expertise and regulatory framework, would go elsewhere in Europe or further afield to Bermuda, Cayman Islands and the US. 

Guernsey Finance CEO Rupert Pleasant (pictured) said: “This report has been key in highlighting the value of Guernsey to the City of London and the UK more broadly.

"The island’s financial services industry has played a significant role in increasing the international competitiveness of UK financial services providers, improving risk-adjusted returns and diversifying portfolios. It represents a mutually beneficial collaboration.”

• The full report can be found here

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