1. ITV Report

Jersey's government warned: Cut costs or put up taxes to cope with economic uncertainty

Photo: ITV News

Taxes will need to rise or public sector spending be cut if Jersey's government is to balance its books over the next four years.

That's the warning of a leading group of economists who advise Jersey's government on its financial plans.

The Fiscal Policy Panel warns £340 million was taken out of reserves, or rainy day funds, between 2009 and 2017 to balance the books.

It warns more money needs to be set aside from 2020 to 2023, an issue made even more pressing by the uncertainty caused by Brexit.

Among the proposals, a call to increase the percentage people pay towards the Long Term Care Fund. The report reveals the Social Security Minister is considering increasing it to 1.5% in 2020.

The panel believes Jersey's ageing population will cause further strain on the public purse, with proportionally more retirees and fewer workers.

The central projections are for continued economic and employment growth across the period of the coming Government Plan, though there may be some weakening this year due to the uncertainties of Brexit. With the economy operating above capacity, it would be appropriate for the Government to continue to run budget surpluses, though flexibility will be needed should conditions deteriorate. If the economy remains above capacity, we would advise that a plan be set out to replenish the Stabilisation Fund over the course of the 2020-23 Government Plan.

– Dame Kate Barker, Fiscal Policy Panel chair
Deputy Susie Pinel Credit: ITV News

The Treasury Minister, Deputy Susie Pinel, said she welcomed the report from the panel.

I am grateful for the panel’s in-depth analysis of the Strategic Reserve and Stabilisation Fund and we will consider their recommendations as we develop the plan. I have already taken steps to replenish the Stabilisation Fund, with the States Assembly approving a £50 million transfer in 2019.

– Deputy Susie Pinel, Treasury Minister