Budget is on track to end the deficit
Wednesday 9th October 2013, 4:00PM BST.
ANYONE looking for an exciting 2014 Budget from Treasury and Resources today will be disappointed. But its lack of surprises is also its strength.
As the great recession grinds on, the Policy Council is putting its faith in economic growth, restraint and a further dipping into the reserves to avoid drastic tax hikes but nevertheless work towards filling the ‘black hole’ deficit.
With some encouraging signs on the horizon and given no further global economic shocks, an increase in GDP is anticipated at the same time as the States financial transformation programme is beginning to make a difference.
For the pessimist, the earlier announcement that income tax and document duty receipts are down £11m. on expectation are worrying. However, T&R believes that this will not be repeated next year and is not indicative of an underlying problem.
As a result, it is proposing to put more money to one side for capital projects – thereby increasing the deficit – and spending a further £1m. or thereabouts to help stimulate the local housing market.
Get that moving, the minister reasons, and people moving home, painting and decorating and buying new interiors will get cash and business trickling down into the economy.
His own view is that there are signs of new business coming in via the financial services sector and that modest growth and the ongoing pressure to economise will close the deficit.
If so, that will conclude the process started when Guernsey adopted zero-10 in 2008, just ahead of the global credit crunch, and will be a significant achievement.
Yes, that will have been at the expense of raiding the contingency reserve (arguably what it was created for) but by next year, that pool of cash should stand at about £200m., just £23m. less than it was when zero-10 started and the same as it was in 2005.
If all does go according to plan, and there’s the review of personal tax, benefits and pensions to get through next year, T&R will have achieved a great deal.
Given the current conditions, putting up a Budget that might be called dull is a result.