GUERNSEY: Guernsey-based Funds Channel Additional £13 billion into UK Economy

Press Release from Guernsey Finance, Monday 29 January, 2024. 

The contribution that Guernsey’s finance sector makes to the UK economy has been highlighted in research conducted by Frontier Economics – one of the largest economic consultancies in Europe.

The findings also show how Guernsey’s financial services expertise is aligned with several UK policy priorities such as the transition to net zero, infrastructure funding and regional investment.

Key findings
• Guernsey-based funds channel significant investment into the UK economy, and currently hold UK assets worth £57 billion.
• Guernsey-based funds’ capital investment into UK assets has increased by 14% per year since 2020. The value of this investment should not be understated as total Foreign Direct Investment into the UK is falling.
• UK fund managers generate £2 billion of fees annually from Guernsey-based funds. This income generates additional tax revenue for the UK, as well as a social value of approximately £3-4 billion every year for the UK.
• UK FTSE 100 companies may collectively save almost £100 million per year by using Guernsey captive insurance structures.
• Guernsey international pensions generate approximately £30 million per year in total for UK professional services firms and investment managers.

Guernsey, a British Crown Dependency, channels large amounts of capital investment into the UK. Currently, Guernsey-based funds hold UK assets worth £57 billion. The report shows that 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 £2 billion of fees from Guernsey-based funds annually, generating additional tax revenue for the UK. 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 over £3 billion 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 which 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 USA.

Rupert Pleasant, Chief Executive Officer, Guernsey Finance, 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.

“We are proud to be a part of the British family. The symbiotic relationship that Guernsey enjoys with the UK benefits both jurisdictions. We hope this partnership will continue to grow, to preserve our existing value and identify future opportunities for collaboration.”

The full report can be accessed here: https://www.guernseyfinance.com/industry-resources/literature/general/value-of-guernsey-financial-sevices-to-the-uk/