Fiscal Policy Panel analysis of Jersey’s economy

On 18 September Jersey’s Fiscal Policy Panel published a Medium Term Report.  This includes a comprehensive analysis of the performance of Jersey’s economy over the last four years. Key points

• Global interest rate rises have been the main force shaping Jersey’s economy. Because its banks hold large international deposits, the island gained when central banks tightened policy. Bank profits rose 144% between 2021 and 2023, which drove real GVA growth of 14.3% over that period, or 6.9% a year on average. Bank profits fell in 2024 and pulled GVA down, although the rest of financial and related professional services (FRPS) performed strongly. That pattern appears to have continued into 2025. Financial services employment rose 1.0%, ahead of the assumed 0.8%, even though bank profits probably fell again.
• Growth has been heavily concentrated. Between 2021 and 2024, FRPS grew 31.4% in real terms, while the economy outside FRPS and the public sector grew by just 0.02%. Retail and hospitality both shrank in real terms.
• The labour market shows the same imbalance. Jobs rose by 1,700 between 2022 and 2025, but more than half of that increase was in the public sector, whose share of the workforce rose from 14.3% to 15.3%. The public sector wage bill grew by over a third, compared with a quarter in the private sector. Staff costs rose from 53% (£492 million) to 59% (£695 million) of government spending. A partial recruitment freeze since August 2024 has slowed public hiring. Meanwhile, non-finance employment fell 0.9% from 2024 to 2025, the largest drop on record apart from the 2020 pandemic. Non-local workers’ share of jobs also rose, from 12.8% to 13.6%, growing faster than jobs held by entitled residents.
• Unemployment remains low, with about 830 people registered as actively seeking work and 210 long-term unemployed. However, that number has risen by over 100 since May 2025. Advertised vacancies have fallen steadily. Private sector postings dropped from 2,914 in 2023 to 1,956 in 2025, and public sector postings fell from 696 to just 26. Together these figures point to a softening but still tight labour market.
• Inflation is the main concern. RPI peaked at 12.7% and has since eased, but underlying RPIX inflation remains around 4%, well above its historical average of 2.4%. Since late 2024, RPIX has averaged 3.6%, compared with 3.0% for UK CPI, which signals growing price pressure generated on the island. One contributor is the minimum wage, which has risen 63% since 2022 to £13.59 an hour, far outpacing 25% growth in average earnings. Higher freight costs have also added to prices. Because Jersey’s economy is small and interconnected, these pressures can spread quickly, and the island has no monetary or fiscal levers to counter them. The resumed Business Tendency Survey shows these rising costs are now holding back activity in non-finance sectors.

This analysis has been included in an updated version the Policy Brief Economic Trends, which provides a summary of the key data on trends in the Jersey economy, in particular the major variables – economic growth, retail prices and earnings, as well as the analysis by the Fiscal Policy Panel.