Guernsey’s Standard and Poor’s credit rating has remained steady for another year.

However, the rating is partly based on assuming the island introduces “a suite of tax reforms, including a Goods and Services Tax”.

S&P gave Guernsey an A+ rating with a long-term “stable outlook”, a spokesperson for Economic Development said – a rating it’s held since January 2023.

Deputy Andrew Niles, Vice-President of Economic Development, said the decision confirmed “the island’s strong fiscal position and prudent long-term policymaking”.

Tax reforms

“Importantly, S&P recognises that a suite of tax reforms, including the introduction of a Goods and Services Tax (GST), is expected to be implemented from 2028,” he added.

Deputy Andrew Niles said tax reforms would “strengthen and diversify Guernsey’s revenue base”. (Andrew Niles)

Deputy Niles said the reforms would “strengthen and diversify Guernsey’s revenue base”, as well as improving the island’s long-term financial position.

The agency estimated Guernsey’s economy grew moderately in 2024 by 2%, and predicted “moderate” 0.6% growth between 2025 and 2029.

The report also recognised Guernsey’s “positive” Moneyval evaluation last year and its implementation of the Pillar Two framework, which S&P said highlighted the bailiwick’s “commitment to international standards”.

Public sector assets

The States decided in 2023 to change its investment strategy, so it had fewer liquid assets – assets that can quickly be turned into cash.

S&P said it expected Guernsey’s liquid public-sector assets to drop to around 50% of GDP by 2029 – from a high of 87% in 2020 – which it said was “ample”.

S&P said the new investment strategy – with greater emphasis on things like property and private equity – could bring “greater returns overall”.

However, it risked giving the States assets which were “not readily available to service debt in times of stress”.

Having enough liquid assets was “key” to Guernsey getting the A+ rating, S&P said.

A person uses a smartphone displaying a “Credit Score” checking app, with a financial dashboard featuring charts and graphs visible on a blurred computer screen in the background.

What is the S&P credit rating?

The S&P credit rating is an assessment of how likely a government is to repay its debts on time – similar to a personal credit score but for a country or jurisdiction.

The score can influence how much it costs to borrow money, investor confidence, and the island’s international reputation.

A horizontal chart displaying the full S&P Global Ratings scale from investment grade to speculative grade, with descriptions beneath each rating: Investment Grade AAA – Extremely strong capacity to meet financial commitments. AA – Very strong capacity to meet financial commitments. A – Strong capacity to meet financial commitments, but somewhat susceptible to economic conditions and changes in circumstances. BBB – Adequate capacity to meet financial commitments, but more subject to adverse economic conditions. Speculative Grade BB – Less vulnerable in the near term but faces major ongoing uncertainties to adverse business, financial, and economic conditions. B – More vulnerable to adverse business, financial, and economic conditions but currently has the capacity to meet financial commitments. CCC – Currently vulnerable and dependent on favorable business, financial, and economic conditions to meet financial commitments. CC – Highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty. C – Currently highly vulnerable to non‑payment, and ultimate recovery is expected to be lower than that of higher‑rated obligations. D – Payment default on a financial commitment or breach of an imputed promise; also used when a bankruptcy petition has been filed.
Anything from AAA to BBB is considered ‘Investment Grade’, while lower credit scores are ‘Speculative Grade’. (S&P)

The ratings go from AAA (the best) down to D (the worst).

Guernsey’s long-term rating was A+, while its short-term rating was A-1, with a “stable” outlook.

That’s lower than Jersey’s long-term score of AA- as well as the UK’s AA rating.

However, it puts Guernsey comfortably in the “investment grade” bracket, which S&P says means it has a “strong capacity to meet financial commitments, but [is] somewhat susceptible to economic conditions and changes in circumstances”.