Residents of Guernsey have experienced a significant decline in their purchasing power, with average incomes falling by 12% in real terms over the past five years. The findings come from the recently published 2023/24 Household Expenditure Survey, which gathered data from over 2,000 individuals to assess the cost of living on the island.
While the survey revealed that the average gross income – before deductions such as taxes – reached £77,619 per year, marking a 12% increase in nominal terms compared to 2018/19, this gain was entirely eroded by inflation. Once adjusted for rising prices, the real value of incomes decreased by the same percentage point. This highlights a growing disparity between nominal wage growth and actual spending power for many households.
The survey also shed light on expenditure patterns, indicating that average annual spending in 2023/24 stood at £67,411. Although this represented a 19% nominal increase from five years prior, in real terms, average expenditure actually declined by 6%. After accounting for income tax, social insurance contributions, and other funding sources like savings or loans, the estimated average money available for household expenditure was £69,067 per year.
A concerning aspect of the report was the state of household savings. A substantial 41% of respondents disclosed that they either possessed no savings or had less than one month's worth of income set aside. This lack of financial buffer leaves a significant portion of the population vulnerable to unexpected expenses or economic downturns, potentially exacerbating the impact of declining real incomes.
Housing costs continue to be a considerable burden for many islanders. The survey found that individuals in the affordable rental or partial ownership market allocated an average of 33% of their gross income towards housing-related expenses. Private market renters spent an average of 22% of their gross income on housing, while homeowners with mortgages dedicated 19% to these costs. Helen Walton, head of the Data and Analysis Service, emphasised the importance of this data, stating it helps ensure inflation figures accurately reflect islanders' spending habits and informs future policy decisions and market research.