PWC: Island’s Economy Likely to Underperform

The Manx economy risks falling behind other jurisdictions, a major international firm has said.

PwC has outlined the challenges for the Isle of Man, as well as the Channel Islands and Malta in a new report.

The Sustaining prosperity and growth report says that while jurisdictions like ourselves have continued ‘punching above their weight’, we are ‘are now feeling the effects of faltering productivity growth in financial services since the 2007 – 2008 financial crisis’.

PwC said: ‘Looking ahead, their economies could be especially vulnerable to the disruptive impacts of climate change, geopolitical instability, technology disruption and ageing populations.’

It added: ‘Economic projections suggest that Jersey, Guernsey and the Isle of Man are likely to underperform the OECD average GDP growth in the coming decades.’

One of the larger issues is that of ageing populations and shrinking workforces putting severe pressure on tax income and public finances and while attracting new workers from overseas could offset worker shortages, ‘attitudes to migration vary across the four islands, as does their capacity for population increases’.

While Tynwald has set a target of having infrastructure that can sustain a population of 100,000, Jersey has been looking at ways to remove the need to grow its population to sustain public services.

However, PWC says that there are opportunities for the island to capitalise on our potential and ‘take the lead in areas like climate action and sustainable investment’.

Nick Halsall, territory senior partner at PwC Isle of Man said: ‘The Isle of Man is developing and diversifying its economy as it looks to sustain the impressive levels of growth seen in recent years. But it’s important to build and sustain public support for the transformational changes ahead and make sure all islanders can benefit from the step-up in investment and growth.

‘For our economic success to be sustainable and beneficial, we should also accelerate investment in areas such as the green transition. Get this right and the future for our island looks promising.’

It added:

Priorities for government

• Civic engagement addressing the Island’s transformation and potential population growth

• Protect and evolve our current industries

• Accelerate and invest in the green transition

• Invest in productivity and innovation

• Become a magnet for talent in a mobile world

• Lay the foundations for future success through strong government finances

Priorities for businesses

• Boost the talent pool

• Collaborate to compete

• Seize the green opportunity

• Invest for the future

• Embrace the silver economy

The Island Index: Sustaining prosperity and growth report is available here.