It’s the next update that will count
Friday 27th September 2013, 4:00PM BST.
TREASURY minister Gavin St Pier delivered an FTP and financial update to the States Assembly yesterday and it was a measured, informative assessment of where the island is.
And, as he said, it would also help to set the scene for the forthcoming Budget report next month.
If so, do not expect a happy start to 2014.
Guernsey still has a financial black hole. The amount the States expects to take in income tax will be £10m. short of previous estimates, some departments will overspend and the savings anticipated through the financial transformation programme are behind schedule.
In addition, the minister had to urge his colleagues not to blow their remaining cash allocations for 2013 before the end of the year as a result of the ‘use it or lose it’ herd mentality that affects many organisations.
That he had to issue the warning is telling. The States still has not caught on to the absolute requirement to save taxpayer money although it has been well insulated from the worst effects of the recession for several years now.
Is, however, a £10m. shortfall on tax receipts the worst it is going to get?
Labour statistics out this week show unemployment worsening while the number of people actually in work has fallen to 2003 levels.
The financial services sector has recorded its third successive annual drop in numbers working there and retail (combined with wholesale and repairs), which traditionally picks up finance’s manpower slack, has shown a worse decline, again for the last three years.
The only significant sector to demonstrate growth is construction, which is hardly underpinning the high-wage, knowledge-based economy Guernsey wishes to be and was before the crash.
The minister’s speech highlighted some positives, including unspecified signs of recovery in the economy, which are encouraging, but the overall position is worse than his last update.
The question therefore remains, is this as bad as it gets?
If so, a relatively bad news Budget followed by steady if unspectacular growth next year means Guernsey will indeed have had a good recession.
If not, what will a States that spent much of this week fretting about who’s actually in charge, do about it?