10 July 2020
We know that the short-term impact of the lockdown has been significant on everyday life, on society and on our economy.
Estimates of the economic impact of COVID-19 vary, but our Fiscal Policy Panel (FPP) has forecast that output in the Jersey economy will fall by more than 6% in 2020.
The Government’s economists are also developing estimates of the economic impact on the Island in the short and medium term, with the current reasonable assumption being that the three months of lockdown inflicted a reduction in output – known as GVA – in the economy of over £100 million per month.
A more pessimistic, but plausible assumption, places the impact closer to £120 million a month.
The Fiscal Policy Panel has also warned that a downturn cannot be averted.
Today we are announcing a package of measures to kickstart the economy and minimise the downturn as much as possible.
Taking on board these forecasts, and in line with advice from the FPP, the Council of Ministers has been developing this package, which follows a similar path to the response to the 2007-08 global financial crisis when £44 million of stimulus funding was allocated.
Back in 2009, the programme had three objectives which still hold true to the current situation. These are:
- to provide a stimulus to the Jersey economy as conditions deteriorate, to help support employment and businesses in Jersey
- to support employment in the Island by assisting individuals affected by the economic downturn
- to create new opportunities for businesses in Jersey, to support them through the downturn and mitigate job losses.
In addition to this, our new stimulus package is:
- Timely – the measures will take effect quickly to maintain confidence, economic activity, output and employment
- Targeted – they will maximise spending that benefits the local Jersey economy
- Temporary – the measures will have end dates, as permanent measures create structural budget deficits.
So, the measures we are announcing today are:
- direct payments of £1.3 million to low-income households
- a reduction in employee Social Security contributions, to the value of £26 million
- more time to repay Social Security and GST deferrals across 2 years, a £40 million reduction to revenue in 2021
- £11 million given directly to Islanders to support spending in the local economy – as the Chief Minister has set out
- a Fiscal Stimulus Fund of £50 million
In addition, £50 million has been allocated to support key infrastructure needed by the Island. £10 million of this has already been used as a loan for Blue Islands.
This is a significant package of support measures which we believe will kickstart Jersey’s economy by supporting businesses and individuals and maximising spend in the island.
I’ll now hand over to the Minister for Social Security, Deputy Judy Martin.