Guernsey States facing 'hard decisions' as public finances in the red

Credit: ITV Channel TV

The States of Guernsey will have to cut back on its spending plans due to a dramatic drop in revenue due to the Covid-19 outbreak, according to the island's Policy and Resources Committee.

Despite forecasts in March suggesting a much brighter financial forecast for the island than expected, the Treasury says the need to provide business support and fund testing and vaccination programmes across the Bailiwick, has increased costs and reduced forecasted rises in government income.

As a result, its budget is currently several million pounds in the red as opposed to more than £65 million in surplus.

The committee warns that the long term financial impact of the pandemic, coupled with the need to provide for the island's ageing population, means the States has some 'big decisions' to make to avert a potential financial crisis in the future.

The committee also says that if the States sticks to current commitments on its capital spending programme, it risks continuing an overall deficit in general revenue.

It is currently preparing a review to address longer-term problems in the island's tax system, due to be published in September 2021.

Its Treasury lead says deputies must see the 'big picture' and prepare to make difficult decisions.