The latest Credit Opinion Update report from Moody’s highlights that labour shortages remain a structural challenge faced by the island’s economy.
The number of job vacancies remaining at an average of around three time the number of unemployed individuals against a very low unemployment rate of 0.6%.
Although immigration levels are “relatively stable”, they remain insufficient to cover industry employment needs.
Inflation
The report found that inflation has remained broadly stable since the end of 2024, despite a slight acceleration in the first quarter of 2025.
As of October 2025, the annual inflation rate, measured by the Consumer Price Index (CPI), stood at 2.8%, down from 3.3% in August.
Lower energy prices have contributed to price stabilization over the past year, although this has been partially offset by rising costs in hospitality, food, alcohol, and generally goods and services.
Moody’s anticipate the annual average inflation rate to be 2.8% for 2025, with a decline to 2.5% through 2026.
Price growth in the Isle of Man is expected to continue mirroring that of the UK due to strong economic linkages, although the islands inflation dynamics are generally more sensitive to oil prices development.
Downgrade?
Moody’s reported that downward pressure on the rating would arise if it expected a material deterioration in the island’s own economic or fiscal position:
“Technological or regulatory changes in key industries, including the gaming sector, could pose a risk to the credit profile, given the significant concentration of economic activity in these sectors.
“A downgrade of the UK’s sovereign ratings could also put downward pressure on the IoM’s ratings. However, it is possible that the trajectory of the IoM and UK ratings could begin to diverge if the IoM’s intrinsic credit strengths remained intact despite pressure on the UK credit profile or the negative spillovers to the IoM proved to be less significant than expected.”
MONEYVAL
Interestingly, in Tuesday’s Tynwald sitting the Chief Minister acknowledged that tension has arisen between the government and the business community in the run-up to next year’s MONEYVAL assessment.
Alf Cannan was responding to concerns from local industry about increasing regulation.
He told Tynwald that the process ahead will be challenging, but emphasised that the island must meet higher standards in order to pass the review.
MONEYVAL is a monitoring body under the Council of Europe that evaluates how well jurisdictions comply with international standards to prevent money-laundering and terrorist financing.
Its reports assess both technical compliance and effectiveness.
Links?
Because MONEYVAL assesses the strength and reliability of anti-money-laundering (AML) and financial-regulation frameworks, a poor outcome could reflect broader institutional or regulatory weaknesses.
That could in turn feed into Moody’s evaluation of “institutional risk” or “governance” when rating a jurisdiction.
A poor MONEYVAL outcome could raise red flags about regulatory and institutional strength, which Moody’s might factor into its broader risk assessment.
But it’s not guaranteed to affect the rating, it depends on the overall picture.
Moody’s Rating
Treasury Minister Dr Alex Allinson MHK said: “Maintaining an Aa3 stable credit rating from Moody’s is a strong endorsement of the Isle of Man’s sound financial management and resilience. This approach reflects our commitment to the Island’s economy through prudent fiscal policies and economic diversification, while safeguarding reserves and Government finances.
“The positive growth outlook underlines the strength of our economy and reflects confidence in the Island’s long-term stability from a highly-respected and independent international agency.”
The credit rating from Moody’s can be found here.
