Jersey Developing Answer To Budget Imbalance
by Jason Gorringe, Lowtax.net, London
04 February, 2015
Jersey's Fiscal Policy Panel (FPP) has warned of an emerging structural deficit, which without extra fiscal policy measures will reduce the island's fiscal reserves.
The finding is included in a new report from the FPP that will be used to inform the development of Jersey's Medium Term Financial Plan (MTFP) for the period 2016 to 2019. The report's key recommendations include:
- Budgetary assumptions should be updated to reflect the new data;
- Authorities should look to balance tax and spending over the medium-term, and a depreciation allowance could be introduced when the island's finances have been strengthened;
- Authorities should develop a strategy for managing the fiscal consequences of the aging population; and
- New initiatives should be launched to improve economic productivity and the island's future economic prospects.
FPP Chairman Joly Dixon said "The Panel have seen some signs of a moderate improvement in Jersey's economy and expect 2014 to have seen a return to growth for the first time in six years. Looking further ahead, the economy is expected to continue to grow modestly over the next few years as spare capacity is used up."
Responding to the FPP report, Treasury and Resources Minister Alan Maclean said: "It is helpful that the panel's findings confirm our position that economic growth and productivity, identified as a strategic priority by this Council of Ministers, will be key to sustained recovery and that the plans which are already in place for capital investment should be an important part of the MTFP."
"The Panel's advice and findings also confirm the need for fiscal prudence and to find sustainable ways to address the risk of any structural deficit. The Council of Ministers has already recognized this and its early discussions on this MTFP focused on the need for a sustainable and balanced position to be reached by 2019. We will continue to face challenges, not least because the global economic climate remains volatile, but the healthy balance sheet Jersey has maintained as a result of the careful fiscal planning of recent years means that we will be doing so from a position of strength."
After consulting the Council of Ministers, Maclean will provide a more comprehensive response to the FPP's report and recommendations.
See all of today's news