UK Budget 'good for Guernsey'

TREASURY minister Lyndon Trott has welcomed Gordon Brown's robust predictions for the economy. In what was widely expected to be his final Budget, Mr Brown forecast low inflation and robust economic growth of 2.5-3% for the next 12 months.

Deputy Trott seized on the figures to back the States' zero-10 tax plans, due to come into force in January.

'My initial reaction is that the Treasury forecasts for UK inflation are benign and good for Guernsey and the forecasts for growth are positive.

'There are also good forecasts for UK inward investment, which has ramifications for Guernsey.

'All these factors will ensure that the Guernsey economy will not be contra-cyclical with the UK and, aligned with UK growth, it is very positive for fiscal and economic reform.'

He said the shock 2p cut in the basic rate of income tax, bringing it in line with Guernsey's long-held and sacrosanct 20p, was interesting but would have little impact on perceptions.

'It is increasingly important to look at all taxes, not just focus on the basic rate of income tax. Higher indirect taxes is the trend everywhere and, on that basis, Guernsey still represents good value.'

Guernsey accountants agreed that the detail of the Budget was unlikely to have much impact locally.

Graham Parrott, of Ernst & Young, said: 'Once again, we in Guernsey can be thankful for a Budget that has limited impact here.'

KPMG senior partner Jonathan Hooley noted the inclusion of the VAT exemption 'loophole', referring to government negotiations with Guernsey and seeking similar commitments about its use to those given by Jersey.

'It's a very interesting Budget from the UK perspective - Gordon Brown going out with a bang, so to speak - though there are no specific measures targeted at us,' he said.