Economy haemorrhaging over £120m a month

Wednesday 20 May 2020

Jersey’s economy is haemorrhaging over £120million every month of lockdown, the Chief Minister has confirmed.

Details of how the covid-19 health crisis could see the economy lose more than a billion over the course of a year emerged during yesterday's States Assembly meeting.

Answering a question from Deputy Inna Gardiner about economic modelling in different lockdown scenarios, Chief Minister Senator John Le Fondré said that the government was currently only working with “very high-level figures” until a more robust economic recovery programme is established imminently.

The cost to the local economy was framed as the decrease in Gross Value Added (GVA), which is based on the profit of local businesses added to employee salaries to give a sense of the overall value of a jurisdiction’s economy.

Pictured: The figure emerged during today's virtual States sitting.

Senator Le Fondré told the Assembly that this decrease totalled £122m a month, commenting that this “gives an indication of the challenges we are facing."

Responding to a separate question from Deputy Kirsten Morel, Economic Development Minister Senator Lyndon Farnham gave further details of the economic impact. He said that GVA “is estimated to be about 30% down right now” and that this “shows that it’s having a huge impact on our economy".

Senator Farnham said the “worst-hit sectors” include tourism, hospitality, wholesale and retail, legal activities and general commerce.

This cost to GVA, the Economic Development Minister explained totals “well over a £1bn pounds a year” and, for context, he estimated that the Jersey economy is worth “approximately £4bn".

“So that is clearly an unsustainable figure,” he added.

Pictured: Senator Farnham said that the loss to the economy equates to a 30% nosedive. 

This comes at a time when the Government is paying out significant sums to support businesses and islanders alike, whilst expecting a far smaller tax taking after deferring GST and social security payments.

The Treasury Minister said last week that the Government of Jersey had so far budgeted £142m for both phases of the payroll co-funding scheme, and spent £14.4m on the Nightingale facility at Millbrook; £5m on PPE; £5.3m to employ GPs in the Health Department; £1.7m on serology testing kits; £1.28m for additional key worker accommodation, as well as further sums for social security support, travel arrangements, prescriptions and to fund other services. 

It’s so far unclear how Jersey’s economy will recover from this nosedive. Assistant Treasury Minister Senator Ian Gorst last week proposed a ‘new deal’ to rejuvenate the economy, but the Treasury has since backtracked from that announcement.

Looking towards the economic recovery plan, the Chief Minister explained that he is signing off on the formation of an Economic Recovery Group, which has already “started meeting in effectively a shadow form” and an Economic Council will shortly be added to that.

States Members are also expecting a briefing on further economic modelling later this week, or early next.