Island balances its books during 2021
GUERNSEY has managed to balance its books during 2021, despite earlier predictions of a loss of £33m.
The good economic news was delivered by Policy & Resources treasury lead Mark Helyar as he opened the annual budget debate in the States yesterday.
‘The good news is that for the time being at least, there is no more bad news,’ he said.
He detailed the wildly fluctuating expectations of this year’s economic results, which initially reported a likely £22m. deficit, increasing to £33m. after the second lockdown, before being marked down to a mere £5m. when that lockdown turned out to be half as expensive as the first.
Even that figure has turned out to be pessimistic, however, as the latest projections are for a break-even position by year-end, fuelled primarily by a property-sales boom and cost-cutting.
‘This improved out-turn is primarily due to a combination of some exceptionally high levels of document duty receipts in recent weeks,’ Deputy Helyar said, ‘and a higher than anticipated reduction in forecast revenue expenditure.’
The accelerated recovery was enough to counter a £12m. loss at the ports, the £20m. spent on business support during lockdown, and the original projection of a loss of £22m., which was made before the second lockdown became necessary.
‘This represents a truly exceptional swing in performance without precedent in any Guernsey historical economic information which I have been able to research,’ Deputy Helyar said.
Guernsey saw its economy contract by about half of the 9% experienced by the UK and Jersey.
He went on to report a forecast surplus of £22m. for 2022.
The positivity in his budget speech also stretched to analysis of the economic processes being followed by the States, with the Government Work Plan having brought about ‘the very essence of consensus’, with ‘far less internecine fighting for an extra piece of the cake by amendment’.
Indeed, no amendments were placed by States members to this budget, in contrast to some previous years, when dozens of amendments have been placed.
This meant that everyone could see what other departments were prioritising and how their projects had been costed, meaning that P&R no longer had to ‘play referee’.
‘Now it is time for us to start to deliver on the initiatives in the GWP in the knowledge that we can all look forwards rather than waste time jockeying for position,’ he said.
Deputy Helyar was careful, however, not to convey a congratulatory tone, warning of several factors that could undermine this year’s positive results. No money had been put aside for capital projects, he said, and the social security fund had been reduced by £31m. – a sum which was not counted in the main annual budget. He reminded members again that demographic changes would continue to eat into reserves and that macroeconomic factors outside Guernsey’s control could threaten the Bailiwick’s future economic performance.
These included global supply chain and shipping issues, which could increase inflation, alongside labour shortages.
Despite a majority of States members speaking out against the introduction of a goods and services tax during the recent tax debate, Deputy Helyar also reiterated his view that the tax base needed to be broadened with a consumption tax and said work was under way to bring back new tax proposals by July.
By that same deadline, it is also expected that Guernsey and 135 other jurisdictions will have brought in a tax of 15% on companies earning more than 750m Euros, representing, Deputy Helyar said, a ‘major change to the international tax framework’.
