The IoD Guernsey's first Directors' Economic Confidence Survey shows that business leaders feel confident in their own organisation’s prospects over the next 12 months, despite revealing a negative sentiment towards the island’s overall economic outlook.
Financial services dominated the sectors responding but there was good representation across all sectors, meaning that respondents approximately mirrored the island’s industrial make up.
The responses show a -18% net positive1 sentiment about Guernsey’s economy over the next 12 months, with the highest proportion saying they feel ‘quite pessimistic’. Less than one quarter of industry sectors represented in the survey felt optimistic about the local economy.
Local opinion about the island’s economy is less optimistic than UK business leaders’ sentiment, with the most recent UK IoD survey revealing a -3% net positive reading about the UK’s economy.
However, Guernsey business leaders say they feel confident about their own organisation’s prospects, with a +47% net positive response to the question, and the majority saying they feel ‘quite optimistic’. This compares with +41% In the UK.
In terms of different sectors, 11 out of 14 industries represented in the survey posted net positive results for the question: how optimistic or pessimistic are you about your own organisation over the next 12 months?
Leader’s positivity in their own organisation’s prospects is backed up with a +30% response about increasing revenue over the next 12 months, with the majority of business leaders also saying they will be increasing headcount and continuing to invest in their business.
In comparison, UK businesses feel more optimistic than local leaders about increased revenues, with +45% saying they expect revenues to rise over the coming year.
Whilst revenues are set to rise, +75% say they expect their costs to be ‘much higher’ or ‘higher’, and +21% expect their investment in the company will also increase. Unsurprisingly, profit increases will be stagnant, with a net positive percentage reading of only +1%.
When asked about the negative impacts on their businesses, respondents rated air and sea links, cost and availability of labour and skills shortages/ skills gaps as the top three concerns.
Shortage of housing for employees and compliance with government regulation were cited as the fourth and fifth most significant challenge. Wider economic conditions, local economic conditions and political uncertainty also made the top 10 concerns.
These themes were mirrored in general comments from respondents, with statements focusing on housing, the slow pace of government decision making, connectivity issues and regulation in financial services. ‘This is a key piece of economic data which will help us to understand the state of the local economy and the important business issues, overall and by sector, and to inform the States of Guernsey’s thinking. We can look at current issues and trends going forwards, tracking business sentiment towards challenges like housing and connectivity, which organisations rely on to conduct business and to attract and retain staff,’ said Richard Hemans, the IoD Guernsey's economic lead who is behind the survey.
Mr Hemans continued, ‘There are lots of positives, with respondents feeling optimistic about the prospects of their own businesses and looking to employ and invest over the next 12 months. Whilst the overall view of the Guernsey economy is negative, the other responses indicate some confidence and positive if muted economic growth over the next 12 months.
‘It is encouraging that businesses are still looking to employ people and invest in their productive capacity because it suggests confidence in their prospects.
‘The negative impacts reported are not new news but clearly need to be addressed with urgency.’
‘We would like to thank everyone who took part in the survey. We are confident this is representative of our membership view and this first edition gives us a good baseline for our future, bi-annual surveys.
‘The IoD will be considering the data carefully to help us shape our future activities. We are sharing the information with Deputies and senior civil servants and we look forward to working with policy makers and other business organisations over the coming months to understand and help to improve business confidence.’
The full survey results can be found below and includes survey data by sector and industry response figures. The next Directors' Economic Confidence Survey will run in November 2024.