Claims by a serial and bitter critic of these islands that bankruptcy looms because low tax jurisdictions are ultimately unsustainable were swiftly and effectively countered yesterday by the chief minister and the head of Treasury and Resources.

Far from facing financial difficulties, Guernsey’s economy is strong, sustainable and the envy of most.

The apparent contradiction between the two positions, however, has prompted some to ask what the ‘real’ answer is.

As the official response to the off-island criticism indicated, Guernsey is very well placed and, while it has a £20m. deficit it is about 6% of the £345m. revenues expected this year and thus not a problem.

The intention is to remove that by freezing government expenditure in real terms over the next four years and there is no expectation of new corporate or consumer taxes being required.

Compared to many other jurisdictions, that is a phenomenally strong position to be in.

What provoked the criticism was a move by the UK government to accelerate the removal from the Isle of Man of a VAT subsidy it receives and, whatever gloss the northern Crown Dependency places upon it, that was a brutal and aggressive move by Britain.

Whether it was triggered by outright hostility or irritation that the IoM has been so featherbedded by the UK taxpayer is perhaps a moot point.

The fact remains, however, that the Ministry of Justice has said it does not want the offshore islands to offer zero corporation tax products and, whatever Man’s enthusiasm for pursuing zero-10, massive revenue shortfalls make it less likely to be able to against the mainland’s wishes.

In Guernsey’s case, public finances have held up exceptionally strongly despite the recession and despite government here responding to the new fiscal reality with what the private sector would regard as glacial slowness.

That’s one reason why Education is planning free pre-school education when it cannot pay for it and is happy to foist the cost of a politically-motivated uniform on parents without consultation or consent.

So although Guernsey’s economy is in great shape, the domestic agenda remains sadly neglected which is why the deficit will last so long.