31 August 2016
The Treasury and Resources Minister, Senator Alan Maclean, has welcomed the 2016 Annual Report published today by the Fiscal Policy Panel (FPP).
Fiscal Policy Panel annual report August 2016 (size 1mb)
The independent panel of economists has said the approach taken to developing the draft financial plan, and the significant stimulus it adds to the economy, are appropriate in the current economic environment. Their report provides advice for the Treasury Minister and States Members before the Assembly debates the Medium Term Financial Plan Addition next month. Senator Maclean said the panel’s advice was particularly valuable given the uncertainty following the Brexit vote.
Senator Maclean said “Our draft plan sets out a number of measures over the next three years which are designed to fund the significant investment in health and education that were prioritised in the Strategic Plan. Ministers took FPP advice into account when developing their plan and it is encouraging that the panel members are satisfied that their advice has been followed.
“The FPP have now advised that there may be a need for further measures to balance budgets during the next MTFP. This comes as forecasts for Jersey’s economy have been reduced, primarily as a result of the UK Brexit referendum.”
Economic growth is now expected to be less than 0.5% in 2016 and flat over the following three years – though there is considerable uncertainty over these forecasts.
States departments have been working to understand the potential implications of Brexit for some time, both before and after the referendum result. This includes some planning by Treasury to understand what impact Brexit might have on States income over the MTFP period. Now that updated economic assumptions have been produced, Treasury will continue to monitor what impact this will have on fiscal plans.
Senator Maclean added “The FPP has made a number of useful recommendations, which the Council of Ministers will consider over the coming weeks. It is reassuring that the panel is supportive of the broad approach taken in the MTFP Addition, and does not recommend any immediate amendments to the plan.
“The uncertainty over the nature of the UK’s relationship with the EU, and the impact this might have on Jersey, makes the need for flexibility paramount. Treasury will work with other departments to make sure government can respond appropriately to changes in the economic outlook.”
After consulting with the Council of Ministers, Senator Maclean will develop a comprehensive response to the FPP’s report and recommendations.