S&P Global Ratings affirms its long- and short-term sovereign credit ratings on Guernsey at ‘A+/A-1’ with a ‘stable’ outlook, citing the island’s fiscally prudent policymaking and strong liquid asset buffer. Guernsey remains a significant captive insurance domicile, and the agency notes the insurance sector performed well in 2024, recording increases in insurers' gross assets, net worth and premiums written. Financial services as a whole accounts for around 40 per cent of Guernsey's GDP and directly employs nearly 20 per cent of the workforce, with the funds sector reporting net assets of around £280 billion as of the first quarter of 2025. S&P projects that resilient performance in the fiduciary and funds sectors will support GDP recovery as interest rates decline. The stable outlook reflects the agency's expectation that Guernsey will continue to prioritise sustainable long-term public finances. S&P forecasts that liquid public-sector assets will remain at around 60 per cent of GDP at the end of 2026, which it regards as a key ratings strength. However, the agency anticipates these assets may decline to approximately 50 per cent by 2029 due to government deficits and a strategic shift toward illiquid private market investments. The agency anticipates that a suite of tax reforms, including a goods and services tax (GST) planned for implementation from 2028, will strengthen the revenue base and improve the island’s fiscal position over the longer term. S&P projects GDP growth will average 0.6 per cent over 2025-2029. On the downside, the agency notes it could take a negative rating action if fiscal pressures eroded the island's liquid assets, or if a significant shift in the global regulatory or competitive environment undermined its financial services sector.
