Jersey Meeting Fiscal Targets Yet Risks Remain

by Jason Gorringe, Tax-News.com, London

28 October 2011

Jersey's Treasury Minister, Phillip Ozouf has welcomed the recent Fiscal Policy Panel (FPP) report, which shows that while growth in Jersey is to be weaker than expected, the government has been successful in implementing a long-term plan that will bring the territory's finances onto a sustainable footing.

The report says that Jersey should plan on the basis of a global recovery that will be more fragile and protracted than was expected three months earlier. The report warns Jersey policymakers to be cognizant of these downside risks particularly as Jersey's current fiscal strategy provides the 'absolute minimum' in terms of fiscal consolidation. The report advises that if any significant economic slippage in Jersey occurs, or any measures to dilute fiscal retrenchment are implemented, compensating measures must be implemented promptly.

The report advocates that the government avoid decisions that would reduce the tax take or increase government expenditure in the forthcoming 2012 budget. While the government has made significant progress on reducing the deficit - implementing a number of tough reforms including an increase to the goods and services tax rate - Jersey is expected to run a deficit of around GBP100m (USD160m) this year, before this is reduced to GBP22m in 2012.

Welcoming the update, Ozouf said:

“I am very pleased to see the Fiscal Policy Panel confirm that our public finances are on the right course, and that the States should continue with its Comprehensive Spending Review and Fiscal Strategy Review measures, as an absolute minimum.”

“It is timely that our independent economic experts are reminding us that the global economic climate has deteriorated and that, as a result, the financial situation is still very tight.”

"Although the FPP does not recommend further discretionary stimulus, they have advised that we should support the economy without weakening state finances.”

“The FPP's main conclusions endorse the difficult decisions the States Assembly has been called upon to make in the last few years; decisions which mean we can act quickly and decisively, having already balanced the books and dealt with the deficit.”

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