Owing to their size, the British Overseas Territories are heavily dependent on a small number of industries. The world economic downturn has affected them all, especially those in the Caribbean. In the Cayman Islands, the British Virgin Islands, the Turks and Caicos Islands and Anguilla, decreases in tourism, financial services activity, and related construction activity have led to falling economic output and government revenues. Insurance activity in Bermuda has held up well, although tourism is down. Elsewhere, fisheries and tourism activity in the Falkland Islands have fallen. Gibraltar has a more diversified economy, and revenues have held up well. Montserrat, St Helena and Pitcairn are in receipt of budgetary support from Department for International Development.
The Overseas Territories are responsible for their own economic development, and for management of their own public finances. To mitigate the effects of the downturn, all the territories are reprioritising public expenditure and looking at their revenue raising methods. These reforms are necessary where territories have required permission from the Foreign and Commonwealth Office (FCO) to borrow. Other territories are also undertaking such measures. The FCO does not accept any legal liability for borrowing undertaken by the Overseas Territories. However we continue to seek involvement in Overseas Territories' Government borrowing decisions in order to ensure the good governance of the territories.