Isle of Man

Set in the middle of the Irish Sea, 16 miles off the southwest coast of Scotland, lies the idyllic Isle of Man. The Island gained Independence in 1765 and was given the status of British Crown Dependency in an attempt to diminish its reputation as a secure base for smugglers. This leaves the Island at the mercy of the UK for a variety of its policies, largely in matters of defense and international relations, however, it retains the ability to set its own monetary policy.

The Isle of Man benefits from a low- tax economy, with no capital gains tax, wealth tax, stamp duty, or inheritance tax, and a top rate of income tax of 20%. The standard rate of corporation tax for both residents and non-residents is also set at an appealing 0%, and unsurprisingly, a hefty share of the Island's GNP is accounted for by online professional services. In 2017/18, Information and Communication Technology accounted for 9.1%, Insurance - 17.6%, and e-Gaming > 20% of the Island's GNP.

The disruption felt by these industries has been exacerbated by the government's decision to shut the Manx border in the light of COVID-19. The effect of a total border closure on a small, barely self-sufficient Island nation can not be underestimated and many businesses that operate through the Island, taking advantage of its various financial benefits, are now realizing the potential pitfalls. Still, this isn't the biggest threat to the Manx economy. You might not expect a 221 square mile island with inclement weather to rely on tourism, however, the last week in May and the first week in June usually see some 46,000 visitors flock to the low-tax jurisdiction, which itself has little more than 85,000 residents. Sadly, the social distancing requirements and subsequent border closure have led to the cancellation of the 2020 TT Races, which whilst leaving many international fans heartbroken, has left many more locals anxious about the future of the Island’s economy.

First held in 1907, the Tourist Trophy (TT) sees over 150 motorcyclists tackling “the most dangerous road race in the world”; a 37-mile-long course around the Island's public roads. In 2019, the TT fortnight resulted in an estimated spend of £37.5 million and contributed £27.1 million to the local economy, of which £4 million went directly to the Manx Government. A good indicator of how much these sales affect the average Islander lies in the profit margins of a TT merchandise shop, which can anticipate making around £70,000 during the fortnight alone. Furthermore, many of the hotels on the Island's picturesque promenade, having earned enough to sustain them until the subsequent racing period, are usually able to shut for the remainder of the year.

Bushy's Brewery sees well over 55,000 people through the doors of its beer tent, with patrons and locals returning year on year to soak up the atmosphere. However, this year they have been forced to bottle beer into milk cartons and sell their collectible t-shirts and stickers online in an effort to minimize waste stock and secure what little profits they can. The majority of the Manx economy in some way caters towards the TT, with some companies still operating on a credit-based system throughout the year, trading on good faith alone until they make their June earnings. Without it, many are facing, at best, a significant loss of earnings and, at worst, closure.

The adaptations which businesses have had to make are not exclusive to the Isle of
Man, but they provide useful insight into how the trade and tourism sector may
continue to operate post-COVID, both locally and internationally. Thousands of
Islanders rely on the seasonal employment which the TT brings: breweries, hoteliers,
shopkeepers, restaurateurs, and supermarkets alike. With no sign of movement on
the border and an estimated loss of around £7.8m on the previous year, the Manx
government hopes to inject cash into the tourism sector by encouraging Islanders to
take a "Staycation." Whether this will work remains to be seen, Island residents are
much less likely to spend their money in local stores than tourists, and almost
certainly won't be purchasing the usual quantities of souvenirs and merchandise.

Despite this, a recent increase in paddleboard and kayak rental schemes suggests
that the local residents are interested in what the Island has to offer and keen to
begin exploring the newest holiday destination. By advertising local beauty spots,
campsites, B&Bs, and hotels instead of international travel, the Isle of Man might just
enable the survival of hundreds of local businesses and safeguard its tourism
industry, ready to welcome the TT back in 2021.