Budget 2008 makes for a grim read

Friday 7th November 2008, 2:30PM GMT.

GLOOM, economic turmoil, stagnation, depression… The picture of the global economy painted by the Treasury minister’s first Budget is unremittingly downbeat.

The main positive to be drawn is the belief that, however bad it may get here, it will be worse still in the US and UK.

Other than that, the report makes for pretty grim reading. The island’s revenue surplus is falling sharply from the heady days of just a year ago, when it reached £71m., to a paltry £9m. predicted for 2009.

And if we think that these are hard times now the minister concludes that while the effects of the credit crunch have started to filter through to the real economy, we have yet to see any of the real impact of this summer’s banking crisis.

That means that in boardrooms throughout the island bosses will be looking for ways to tighten the company belt. The conflict of high inflation with falling revenues means costs, wage rises and, ultimately, jobs will come under review.

Although Guernsey does not collate the statistical information needed to prove it, it now seems accepted by Treasury that the island is heading into recession.

Quite how deep, long and painful that proves to be is as unpredictable as the FTSE index. But it is clear that when the Bank of England cuts interest rates by historic levels and the index still falls that nobody should be under any illusions about the seriousness of the situation.

The multi-million dollar question, of course, is what that means for Guernsey’s zero-10 strategy, which depends to a great extent on growth to replace an £80m. annual drop in company taxes.

For now, it seems the Budget of ‘measured consolidation’ – which seeks to claw back some of the lost income from the banks through swingeing increases in tax on real property for offices while improving personal tax allowances – may suffice.

However, an economy in recession will find it impossible to satisfy the dual demands of living within zero-10 constraints and paying for all the huge capital projects on the horizon.

The island may not only be going into recession, it may also be going into debt.

View more: Budget news, Charles Parkinson news, Recession news, Treasury news.

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Paul

November 10, 2008 at 10:10 pm

Are we still going to remain upbeat because it is a nicer more positive look then? Are politicians going to actually start talking the truth for a change? Would be nice surely?

Is it any consulation and anyway does it not just go to explaining the reason why everybody is seeking to look after everypenny. In every country and across the globe? But whilst they are going about it through desperate need why are we complining and rallying for support exactly? It is my opinion that we are making things ten times worse. We appear to be attracting more media attention for all the wrong reasons. But we can still remain upbeat safely in the knowledge that we have an accord with Obama. This will remain to be seen? Aren’t we all looking for a bit more?

Now this is a bit of a turn around isn’t it? Had to scratch my head a bit here. Has our Minister been talking with a PR Rep at all? It would apear that a sense of reality is starting to set in. How long will this last for exactly?

Only one job needs to come under review our CM Surely. How about admitting now is not the time to be hopelessly chasing what may and probably will be nothing other than fancifull dreams at yet extra expense to us? All still not acccounted for? As lovely and rewarding as it may be people are getting more disinchanted on a daily basis. We appear to becoming a Russian ecenomy? Maybe this is a bit extreme but this is where it is all heading towards surely?

It would appear that this blog is asking more leading and searching questions of our electorates motives. It it nice that somebody is keeping us in the loop. And even listening too and puting questions forward. Not a lot is coming from the quarters where it should be thats for sure! Why is this? Far too busy with social diaries is my answer to the people!

When is the legal advice going to be sought? Are we going to wait untill that point and anyway once we get there which is the only place thats its heading towards what then? Waste more money I suppose. What will be the point in wasting more money on a chosen regulator that is going to regulate our own then. What is this all about then eh? Just more belt tightenig in the opposite direction I suppose.

We seem to have a couldn’t care less attitude. How are the people expected to weather this storm when in relity we have let them down massively but still business as usual and the only people making cutbacks are us generally? It seems that if we wish to have luxury then becoming a member of the club that looks out for each other is most definately a step in the right direction. Maybe a lucky win on the national lottery would be another? My firm words to all are whatever you do if you are left with anything to spare don’t invest it locally. Even when this scheme kicks in. Quite simply we can’t be trusted can we? Even when we can claim lipservice that a scheme actually does exist where is the money going to come from exactly? Is it going to be unerwritten or is it a case of taking one at ones word. People need lots of questions answered.

Are we going to go down the road of financing wishlists. That is up to us really but a question that I struggle to come up with an answer to is it actualy. It is my opinion that we could have been driven by a comatosed leader better. Least it would not cost us as much. Which is the question that is on most peoples minds other than those that are not worried pig sick about what is not happening about their savings. My opinion is that this has gone from bad to worse and it is action that is now needed by the people who have lost. Directed at those that will hold the answers. What then hope the lawyers dealing with proceedings can be turned a all? We can in part thank ourselvescos in my book. People are humouring us but we still smile back sweetly. Very strange indeed.

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