Gavin St Pier said that the current economic crisis brought about by the coronavirus lockdown was wholly different to the financial crisis of more than a decade ago, and spending big was the ideal way to deal with the consequences to the economy.
‘It’s quite early in this process in that we’re still going into the economic problems and actually, as I’ve said before, emerging out of it is probably going to take longer than the public health experience,’ he said.
‘If we think that the way to solve the fact that we are going to have a ballooning deficit in 2020, which we talked about a need for £170-£190m., and the way to solve that is either by massively cutting spending somewhere else within the budget or massively increasing taxation, then you know we’re barking up completely the wrong tree.
‘In essence, that austerity approach was the approach that we adopted in the post-2010 global financial crisis, the response to our budget deficit was we wanted to close the black hole and move back to surplus and that is what we did over an extended five- or six-year period bringing us to surpluses in 2017 and 2018.
‘But this is a completely different economic experience.’
He said a different approach was needed for a different situation.
‘This is a very, very short and sharp economic shock to the system,’ he said.
‘Which is why government is responding in a very different way by pumping in literally hundreds of millions of pounds to support business so that we don’t destroy a good chunk of our economic fabric.
‘Hopefully it will be a V-shaped economic recovery and experience.’
Health & Social Care president Deputy Heidi Soulsby also added there was a chance for better island spending.
‘We can also look at this as an opportunity to see what do we want our future to look at,’ she said.
In terms of capital projects that have been up for debate in the States this week, Deputy St Pier said those were already in the system, however, they understood where future money went would need to be looked at in the future.
‘We are going to need to reprioritise it,’ he said.
‘We’re going to need to decide which projects we want to accelerate, which projects we want to decelerate, which projects might be better for the local economy and local contractors and which may not.
‘We haven’t done any of that yet, but we will need to do it over the coming few months.’