S&P states ‘external vulnerabilities’ as one of the reasons for the downgrade and this is likely to be on the back of the closure by the UK Government of the low priced goods VAT loophole that has seen retailers such as HMV relocate their distribution to Guernsey. It is true that approximately 600 jobs will be lost in the fulfilment sector however the vast majority of these are external workers who will most likely be re-employed within the catering or tourism sectors.
The downgrading is somewhat irrelevant as Guernsey has zero external borrowing and reserves which amount to 109% of GDP, statistics which even the richest nations in the world cannot boast of. Fiscally speaking Guernsey remains one of the strongest jurisdictions in the world for the foreseeable future.
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