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S&P improves its assessment of outlook for Guernsey

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Monday 20 January 2020

The rating agency Standard and Poor's today published their most recent assessment of Guernsey.

S&P have affirmed their long- and short term sovereign Credit rating at AA-/A-1+. They have also improved their assessment of Guernsey outlook to stable from negative in light of the greater stability in UK politics and the greater clarity regarding how the UK's exit from the EU will proceed.

S&P said:

"In the UK's December 2019 general election, the Conservative and Unionist Party won a sizable parliamentary majority which we believe in turn would afford the government more room to engage with the EU over the details of their future relationship.

"With the UK moving to the next phase of negotiations with the EU, we anticipate immediate risks to Guernsey as having dissipated. Even then, the level and terms of the UK financial services sector's future access to the EU are still likely to affect Guernsey's corresponding sector, as will changes in UK taxation and regulation of the sector.

"Our ratings on Guernsey are based on our view of the island's strong and flexible institutions, wealthy economy, and considerable fiscal buffers. These strengths are offset by the external risks to Guernsey's economy and policymaking framework, and its lack of meaningful monetary flexibility."

The S&P's assessment is based on an assumption of real GDP growth on 1% a year over 2020 to 2023, but highlights the reputational risks surrounding the international tax environment remain.

Deputy Gavin St Pier, President of the Policy & Resources Committee said:

"We are pleased that S&P has confirmed our own assessments that Guernsey continues to be a fiscally, economically and politically stable jurisdiction. This reflects the island's economic performance over the last year or so. The assessment also reflects the important work undertaken during the Brexit process to project our own stability in contrast to the UK's instability and to ensure Guernsey was prepared for any and all outcomes. While the risk of a disorderly exit for the UK from the EU has receded for the time being, it remains equally important that we continue to work closely with the UK Government to ensure that Guernsey's interests are promoted and protected as negotiations continue to the next stage. If we are to retain this improved assessment by S&P of our outlook, we must retain our stability through the change of government with our own general election in June."

"As ever, we also remain committed to active and constructive engagement with the international community on matters of taxation and transparency."

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