Policy & Resources wants to set aside an average of £5m. a year for public and private sector projects.
The ring-fenced fund, announced today in P&R’s draft 2027 Budget, would receive allocations averaging that amount in each of the next three years from the Pillar Two company tax windfall.
It was announced last week that Pillar Two tax receipts are expected to total £250m. for the tax years 2025, 2026 and 2027, up from earlier estimates of between £30m. and £120m.
P&R treasury lead Charles Parkinson, presenting what he called ‘a Budget for growth’, said that these receipts were expected to decline in the medium-term, but allowed headroom for investment in the next few years.
‘A central feature of this Budget is a new programme of investment in economic growth – £15m. over the next three years. This money will be used only on projects where there has been a clear demonstration of measurable economic benefits, together with robust evidence that they represent value for money,’ he said.
The proposed funding, which will go to a vote in the Assembly early next month, could support projects to strengthen the island’s finance industry and cybersecurity and improve productivity, workforce participation, infrastructure and connectivity.
P&R intends to fund time-limited initiatives rather than ongoing expenditure.
States committees, industry groups and other stakeholders will be invited to submit proposals for investment.
A shortlist issued already of potential areas for investment includes support for childcare to free up parents to work, and improving air links.
The £15m. allocated could be increased if Pillar Two tax receipts climb even higher than latest estimates, which is possible if interest rates and therefore banking profits rise.
The island’s underwhelming economic performance was one of the most prominent issues raised by candidates at last year’s general election.
Data remain limited and outdated as a result of the States’ IT crisis, but the latest information indicates that the economy shrank by 2% in 2023.
In its Budget report, P&R described economic conditions as ‘challenging but broadly stable’, and forecast ‘modest real-terms economic growth of 0.5%’ as its central assumption for 2027.
‘Activity is supported by resilient employment, improving property transaction volumes and continued demand for Guernsey’s specialist financial and professional services.
‘The outlook nevertheless remains unusually uncertain and is sensitive to developments in global energy markets, financial markets and international trade,’ it said.
The senior committee warned that inflation, already significantly higher in Guernsey than in Jersey or the UK, was likely to rise again in the next quarter before easing next year.
‘Renewed inflation pressure means that the improvement in household purchasing power is likely to be gradual,' it said.
‘The latest personal income tax forecasts for 2026 suggest that the aggregate income of the population is increasing, but that inflation is limiting real growth.’
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