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Minister responds to independent economic report

01 October 2012

The Treasury and Resources Minister, Senator Philip Ozouf, has issued the following statement, following the 2012 report issued by the Fiscal Policy Panel: -

“I would like to thank the Fiscal Policy Panel (FPP) for the considered and well-argued recommendations set out in their 2012 Annual Report. The issues rightly raised by the FPP are the very same issues that we have identified and grappled with in the development of the Medium Term Financial Plan (MTFP).  While the report is new to me - the issues are not.

“The 2012 FPP report states that the economic outlook and GVA figures for Jersey’s economy have been slightly downgraded for 2012 and 2013. The recommendations of the FPP in response to this downgrading include:

  • accelerate fiscal support for the economy through increased short-term capital expenditure in 2012 and 2013

  • plan for extra flexibility to enable a reduction in spending in 2014 and 2015, depending on economic growth

  • leave the Stabilisation Fund and Strategic Reserves as they are for the next 2 years, but plan to rebuild the Stabilisation Fund when the economy begins to recover

  • undertake a more detailed review of the impact of the planned capital expenditure

  • adopt certain reporting adjustments of forecasting in future MTFPs or Budgets

Medium Term Financial Plan

“We will now consider how these recommendations might impact on the proposals in the MTFP.  I note the FPP’s observation of the fiscal position in 2014 and 2015 as part of the MTFP.

“The FPP report has helpfully illustrated the difficult balancing act between allocating resources to meet clearly identified spending needs in essential areas, like health, social care and job creation; supporting the economy in the short-term, and protecting the competitive system of taxation on which our Island depends. 

"We have already signaled in the States there will be no significant tax raising measures proposed in the budget.  Those measures that are proposed will aim to promote the consolidation and simplification of Jersey’s existing tax regime in order to tighten compliance on tax collection and reduce avoidance.

Savings targets

“In the light of their comments, I propose to signal an additional savings and efficiency target, which should be delivered, (subject to the economy recovering), by underspends in 2014 and 2015.  I will discuss with the Council of Ministers before the 16th October how this target could be achieved and will publish any amendments at that time.

“The detailed economic analysis set out by the FPP will, for the 5th successive year, provide a valuable context against which we can test our plans. 

“This independent economic scrutiny and challenge from the FPP is an important safeguard for the Island’s long-term financial and fiscal health. I now plan to put the FPP onto a full statutory basis, enshrined within Jersey’s Finance Law.”

Download Treasury Minister's initial response to FPP report in full (299Kb) 

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