Buckle up, we're close to take-off

Less excitingly, although probably more relevant for the rest of us, it also refers to the point at which an economy starts to grow sufficiently quickly to escape recession and return to normal (i.e. previous) economic growth.

That would be nice, wouldn’t it?

So, how close are we to lift-off and seeing an end to the last 10 years of poor wage growth, falling house prices, declining population and a general sense of foreboding about what’s happening to our island home?

The latest numbers are actually very encouraging. So, too, were Policy & Resources president Gavin St Pier’s comments as he published the latest set of States accounts. ‘The success of achieving a surplus for the second year in a row should not be understated, given that for the previous eight years the island’s annual finances were in deficit,’ he said.

He’s right. You see, the turnaround in finances has been remarkable and much greater than you’ve been led to believe. The second successive declared surplus, of £22m., is actually much bigger.

That’s simply what Policy & Resources is suggesting be made available for spending – perhaps on tax allowances or accelerating government transformation – after squirrelling away many more millions into various reserve funds, including one for infrastructure investment.

It’s prudent but also a chancellor’s favourite ploy to prevent politicians groaning under the (alleged) crushing weight of austerity from letting rip with an apparent windfall of your cash. In fact, the actual surplus, the difference between income and expenditure, was a pretty impressive £114m.

What led to that, including more people in work, earning more and paying more tax, plus extra businesses being caught in the ‘non zero’ part of the zero-10 regime, is also good and rather encouraging.

I see, too, that one of the employment agencies says it has nearly 1,000 job vacancies on its books, many in finance-related areas, plus 75 for trainees and 66 for project management positions. That looks pretty close to a boom to me, although it feels nothing like it.

Anyway, there was more good news because the public sector pension deficit isn’t £1bn-plus as we all feared but less than £100m., so we can all stop worrying about it now. Hurrah.

Yes, pensions reality is a bit more nuanced than that, but will have to wait for another day because we need to stick for the time being with economic escape velocity now that Deputy St Pier has (all but) called the bottom of the recession and not a whiff of GST on the horizon.

This matters because when we get there, the sunlit post-recession uplands include effortless GDP growth, increasing tax revenues, rising confidence and more investment.

At that stage, the States will no longer need to worry about how to support the economy because growth should be self-sustaining by normal private sector activity.

The circle, so to speak, has become virtuous.

We may be a way off that yet, but government has been laying the foundations for economic support and is actually keen to get going on spending to boost it.

As Deputy St Pier said, we’re supposed to be spending 3% of gross domestic product a year on capital (infrastructure) projects and have £240m. in hand to do so but only managed £8.2m.-worth last year.

‘…we must invest in the island’s infrastructure and capital plans should be accelerated where possible to ensure that our public services have the infrastructure they need and our economy benefits from this investment. It is vital that we do not merely maintain and replace existing assets, but we must invest to enable transformation of how we deliver our services and, increasingly importantly, to facilitate and drive growth in our economy,’ he said.

Hold on to that. P&R wants to turn on the spending taps, start investing in the island’s future and, by doing so, start pumping cash into island firms and employees. Hang on a bit longer, construction.

Yet every time P&R wants to do something, about half of their States colleagues come up with reasons why they shouldn’t.

Scrutiny Management Committee head Chris Green touched on this in his letter of comment to the Policy and Resource Plan: ‘A modern consensus model of government needs to project a greater degree of clarity and progress earlier in a term to continue to command the confidence of the governed.’

That’s very revealing because it articulates what so many islanders and businesses feel: ‘the States’ isn’t working together for the benefit of Guernsey as elements act merely seeking to block what’s coming out of P&R.

If correct, that’s desperately worrying in the months ahead – think eastern seaboard, runway extension, ending the house price slump, immigration and the staff shortages, whatever – as we strive for escape velocity.

The number one reason for economies failing to hit take-off speed is low business and consumer confidence. At the same time, how the Assembly conducts itself is one of the biggest influencers of that all-important self-belief, which we need at this critical stage.

Makes you think, eh?