"Pre-crisis growth levels unlikely to return soon" in Guernsey

Tuesday 21 October 2014

A major report has painted a mixed picture for Guernsey’s economy, saying that expected growth has failed to materialise and that new measures are needed to sort out their deficit.

The report says that Guernsey is lagging behind the UK in the economic recovery stakes, and that unemployment has only recently started to show any improvement. It also says that while Guernsey’s States finances are in a good condition and that politicians are on the right track, the public sector is struggling to make agreed cuts.

And it makes special reference to the declining economy and falling population in Alderney, describing the issues in the smaller island as “a further challenge the States will have to face”.

The Annual Independent Fiscal Policy Review was written by Professor Geoffrey Wood, an expert economist from Cass Business School in London and the University of Buckingham.

He wrote: “The expected growth has not been forthcoming and the States have needed to rely on other aspects of the policy to address the deficit.

“It would be unwise to assume that Guernsey will consistently return to pre‐crisis levels of growth any time soon, particularly in view of the increasing regulatory constraints on the finance sector. Economic growth can in any event never be guaranteed. The States will need to look to their own income and expenditure to find a real and sustainable solution to the way they manages their finances.”

But the report concludes on a more upbeat note, saying that Guernsey's States Members are on the right track.

Prof Wood wrote: "The States’ finances are in a better position than they have been for some time. The 2015 Budget shows not only continuing success in restraining overall expenditure levels, but also a clear path for returning the Budget to balance. While the Financial Transformation Programme is not expected to meet its target on time, much has been achieved. It is expected that the required remaining savings will be achieved, or even exceeded, by the end of 2017. Reducing government expenditure is no easy task and the States are to be congratulated on what has been achieved."