GUERNSEY no longer has a black hole, according to Treasury and Resources minister Lyndon Trott. It’s now grey, he says. And that ‘grey’ hole is just £25m., with the majority of that being filled by two years’ interest from the States’ contingency fund.

Deputy Trott told more than 300 business leaders at a meeting about zero-10 last night that the financial deficit could be filled.

‘We don’t have a black hole any more,’ said Deputy Trott. ‘Now we have a grey hole that is predicted to be £25m. at the end of 2009. This is entirely manageable and we are very well placed to deliver a Budget having used less than half of our contingency reserve by the end of the second phase in 2012,’ he said.

He also confirmed his belief that the island will not need a goods and service tax, unlike Jersey.

Deputy Trott said it was his belief that islanders will be reassured by the Budget, which will be made public on Friday 9 November.

‘All at Treasury remain very confident that public finances are in solid shape.’

He said that interest growth on the contingency reserve, which had an opening balance of £219m. this year, was £10m. and next year should increase by a further £12m.

‘We are not going to touch any capital in 2009,’ he told a packed Beau Sejour. ‘We are going to use the interest accrued in 2007 and 2008 – there will be no reduction in capital.

‘The balance in 2009 is going to be the same as it is at the start of 2008.

‘As a result of using interest on the contingency fund we will be able to minimise the impact on the resident taxpayer, which is not something less-optimistic individuals believed we would be able to do.’

Deputy Trott conceded that the States, which approved the introduction of the island new corporate tax system for January next year, never expected to use the contingency fund in 2008.

He reminded business leaders that the zero-10 regime was approved by the States in June last year.

‘It is about meeting international standards and obligations and remaining competitive with other jurisdictions,’ he said.