Frontier Economics worked with Guernsey Finance to provide evidence on the nature and scale of current linkages between the Guernsey finance industry and the UK economy and society.
Our in-depth mixed-methods research shows that Guernsey channels large amounts of capital investment into the UK. Guernsey-based funds currently hold UK assets worth £57 billion. A significant proportion of this investment into the UK would not have occurred in the past if these funds were domiciled elsewhere. Specifically, even over a long-time horizon the UK would have been unable to recoup approximately £13 billion of this investment from alternative sources if existing linkages to Guernsey were broken.
Guernsey fund investment in the UK has grown by 14% per annum since 2020. This growth has occurred at a time when foreign direct investment (FDI) into the UK is falling. The evidence collected suggests that Guernsey’s absolute and relative contribution to the UK economy is likely to rise further over time.
Guernsey fiduciary providers have deep and long-established relationships with UK professional services firms who refer clients to Guernsey providers. This increases the competitiveness of UK firms and means UK firms can serve their international end clients better and generate additional exports and revenues.
Guernsey trust structures also facilitate philanthropic activity which will create further social value for the UK.
Insurance regulation in Guernsey is responsive and designed to accommodate a range of different types of vehicles. The bulk of Guernsey insurance vehicles are either special purpose (57%) or captives (36%). Special purpose vehicles allow for additional broker led investment in UK markets and therefore boost liquidity and competition which benefits end consumers. Captives allow UK firms to protect against niche risks where the standard market might not offer coverage. FTSE 100 companies may be collectively saving almost £100 million per year as a result of using Guernsey captives.
The Guernsey pensions sector is large with total assets under management (AUM) of all Guernsey domiciled pensions providers of over £11 billion in 2021. Guernsey international pension activity generates significant revenue for UK professional services firms and UK investment managers. This revenue could be as high as £30 million per year.
Guernsey and the United Kingdom are linked in a symbiotic relationship which benefits both jurisdictions. All of the factors we have described above emphasise that Guernsey is currently an important partner for the UK and the importance of this partnership will grow further.
The international context within which the UK economy operates is undergoing significant change. UK-Guernsey linkages can play a key role in ensuring that the UK is able to meet high priority policy objectives relating to high growth, clean energy and well-funded public services.
To find out more about the research you can download the full report, ‘The value of Guernsey finance to the UK,’ here.
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