Jersey's Fiscal Policy Panel Embargoed Report and News Release
Friday 13 October 10:10
FPP publishes 2017 Annual Report
The Fiscal Policy Panel (FPP) has published its 2017 Annual Report commenting on the draft 2018 Budget. The report sets out the Panel’s conclusions on the appropriateness of States fiscal policy in the context of the global and local economic outlook.
Dame Kate Barker, the Panel’s Chair, commented “The FPP believes that the balance of income and expenditure planned in the years ahead is broadly appropriate. However, it is important that the remaining measures from the MTFP Addition and those proposed in Draft Budget 2018 are implemented on time or other measures need to be brought forward of equal value and economic impact.
“The Panel is encouraged that the latest financial forecasts indicate that its previous advice will continue to be met and that the overall fiscal position returns to balance at around the right time given the expected economic conditions.
“Recent business survey data suggest that it is right to continue to support the economy in the short term but it will be important to be vigilant that the proposed large capital projects do not put too much pressure on local resources and add to inflationary pressures in the construction sector.
The Panel’s forecast is unchanged from August, with the economy expected to grow by around 1% this year and ½% in 2018. However, considerable uncertainty remains around these forecasts particularly with regards to Brexit and the challenges facing the financial services sector.
Dame Kate commented “The performance of the Jersey economy has been relatively positive over the last 12 months, with 2016 seeing a third successive year of economic growth. Employment has been increasing with registered unemployment falling and average earnings continuing to grow. Business survey data has been positive, though this has weakened somewhat in the most recent results.
“The outlook for Jersey remains subject to considerable uncertainty around the impact of Brexit and the challenges facing the financial services sector.
The Panel has made a number of recommendations, including:
- The profile and scale of fiscal measures is broadly appropriate and the Panel advise that the remaining measures (or ones of equal value) for 2018 and 2019 need to be implemented on time.
- The Council of Ministers is urged to ensure that a permanent programme for securing additional efficiencies in the public sector is fully embedded in all future States financial planning and in particular in time for the next MTFP.
- Priority needs to be given to delivering key capital projects on time but also to ensuring that these large capital projects do not put too much pressure on local resources and add to inflationary pressures in the construction sector.
- A number of key issues need to be developed and addressed in the next MTFP:
- Future structural pressures: The longer-term challenges facing Jersey make it clear that further adjustment is likely to be required during the next MTFP period.
- Capital expenditure: Identifying what capital expenditure is required that is conducive to economic growth and productivity improvements.
- Planning for surpluses: If economic conditions over the life of the next MTFP are such that economic activity is above capacity and the States runs budget surpluses in any year, these should be used to replenish reserves – either the Stabilisation Fund or Strategic Reserve.
FPP Annual Report 2017