13 February 2008
Today (Monday 11 February 2008), the Ministers for Treasury and Resources and Economic Development are presenting a key economic report to the States - ‘A new anti-inflation strategy for Jersey’ - on behalf of the Council of Ministers.
Launching the new strategy, the Minister for Economic Development, Senator Philip Ozouf, said “Keeping inflation under control is one of the top priorities for the Council of Ministers. We recognise inflation undermines our economic growth - it means we have to work harder to stand still. High levels of inflation ultimately erode the high standard of living the Island enjoys.”
The Minister for Treasury and Resources, Senator Terry Le Sueur, said: “One of the challenges of our economic success is the need to control inflation. While many factors outside the Island’s control can influence inflation, the Council of Ministers agrees that there is much we can do locally to curb it. Failure to do so would mean that the Island’s residents and businesses would be worse off.”
Following a detailed examination of the nature, causes and costs of inflation in Jersey the strategy addresses the fundamental issues for a small island economy. It recognises that there are no quick wins for controlling inflation and that many of the key ingredients for an effective anti-inflation strategy, such as the new Fiscal Framework and Competition Law, are already in place. The new strategy is principally about developing and strengthening current policies.
Senator Ozouf added: “In recent years we have had considerable success in containing inflation. The time is right to build on this by strengthening the policies we have in place to ensure that we can keep inflation down and create the conditions for further non-inflationary growth. This year, I will examine our competition framework and whether we need to do more to strengthen the hand of the Jersey Competition Regulatory Authority (JCRA) and the Jersey Consumer Council (JCC).”
“The new strategy also makes clear the importance of productivity improvements, with local businesses producing more of the goods and services their customers require while using existing resources more efficiently.”
Senator Le Sueur added: “If we are to continue to keep inflation under control then it is vital that the States pay full attention to where we are in the economic cycle and tailors its policies accordingly. The advice of the new Fiscal Policy Panel (FPP) will be extremely important in this respect and we will work with them to build up our new Fiscal Framework.”
“We also have a new Stabilisation Fund that gives us the opportunity to put money aside when the economy is growing strongly, helping to reduce the build up of inflationary pressures. These thoughts will be uppermost in our minds when we set States spending and tax policies this year.”
The new anti-inflation strategy puts forward nine areas for action. The key points include:
- Retaining the current inflation target of 2.5% for RPIX.
- Setting policy relative to the economic cycle and undertaking the appropriate research to do so.
- Setting fiscal (tax and spending) policy following guidance from the Fiscal Policy Panel and developing the new Fiscal Framework further on their advice.
- Reviewing the effectiveness and resources of the Jersey Competition Regulatory Authority (JCRA) and the Jersey Consumer Council (JCC).
- Examining whether the Regulation of Undertakings and Development Law (RUDL) can be applied in a manner that better facilitates productivity improvements and competition.
- Charging Economic Development with the long-term objective (beyond the current Economic Growth Plan) of delivering productivity improvements across the economy.
- Considering how the new Island Plan can facilitate productivity improvements and better take account of market signals.
- Reviewing the impact of States housing policies on housing demand in the Island.
- Raising awareness and understanding of inflation in the Island as everybody – employees, employers and the States – has a role to play in controlling it.
Please click here to download a copy of the new anti-inflation strategy.