This Is Guernsey

By Gemma Hockey

GUERNSEY will balance its books in four years’ time, according to Commerce and Employment minister Stuart Falla. The deputy chief minister reassured business leaders at last night’s zero-10 meeting that, based on the last decade of ETI growth, the black hole could be eroded within the next three to four years.

‘We believe we can demonstrate that the deficit between income and expenditure of the States will be in the order of £25m. and 3% growth roughly equals £10m.. Therefore, one can assume that within three to four years we will be back to surplus budget,’ he said.

‘If we can keep costs at RPI or less and if growth of ETI remains at RPI plus 3%, then we will gradually close the gap within three to four years,’ he said.

The States intends to fill the black whole in four ways:

n capping public expenditure

n growing ETI receipts - people earning more and in turn paying more income tax

n interest plus some money from the contingency fund

n increasing indirect taxation

Deputy Falla said Commerce and Employment was confident that ETI growth would continue at the same pace as in the past.

‘What we said in the economic plan, with the States approval, was that the objective is for growth to be similar for the next five years, which has been achieved at an average over the last 10 years. ‘What we have been able to demonstrate is that ETI, people’s remuneration, has growth year-on-year at an average of 8% - which is much higher than the 3% that we need,’ said Deputy Falla.

He said that should ETI growth continue to perform as it has in the past 10 years, above that needed to fill the deficit, the second phase of zero-10 might not be of great significance.

‘It’s no guarantee but we have a reasonable assumption that will happen,’ he told the meeting.

Deputy Falla said the ETI growth year-on-year had been achieved with a relatively small increase in population with the current working population at about 32,000 and an estimated growth of 2,000 in 10 years.