States surplus is a calm before the storm

The income forecast for 2021, where the island spent eight weeks in a second lockdown, now comes in at £46m. over the budgeted position, an almost incredulous result.

The States say that customs duties, with less travel and therefore less duty free being bought is a factor, though it is likely to be a pretty small one.

A rise in document duty is not unexpected – all will be aware of the ‘buoyant’ property market, both local and open market – and the knock-on implications of it.

But the staggering success is good old income tax, the revenue source the States don’t want to trust in the longer term as it seeks to diversify the tax base. ‘The expected post-pandemic recovery has occurred earlier and faster than anticipated,’ it said.

The States summed up the impact of the figures. ‘Accelerated recovery and increased revenues have absorbed £15m. of unanticipated expenditure, funded the increased Aurigny loss and Ports loss, at the same time as reducing the deficit by £17m. against estimates, which is a very positive result.’

But the forecast surplus for 2022, now at £22m. – up £14m. on previous estimates – won’t come anywhere near meeting the targets for capital expenditure which this ‘new’ government – actually a year old this month – wants to spend to keep Guernsey moving forward and overcome previous caution in building for the future.

These financial figures will plainly be welcomed by all islanders – with the possible exception of those who have been paying all this extra income tax.

But as P&R reminds us, this is a period of calm with a storm still looming on the horizon.

Figures to be welcomed then, yes, though not relied on for the future. But every effort needs to be made to capture the reasons for this staggering outturn, and see if it can be replicated or built on for future economic success.