Jersey’s Fiscal Policy Panel (FPP) has published an updated set of economic forecasts, which consider the potential impact of the Covid-19 outbreak and has recommended the Island’s fiscal reserves are used to support the economy.
The FPP has advised that the short-term shock on the economy has the potential to lead to long-term structural weaknesses. To reduce the potential structural damage, the panel has recommended that the government supports the economy using reserves, including both the Strategic Reserve and the Stabilisation Fund.
The Minister for Treasury and Resources Deputy Susie Pinel said:
“The Government of Jersey is committed to supporting businesses and households through this challenging time. We have announced a number of measures to date, including support to businesses such as deferring payments of GST and Social Security contributions as well as additional support to the health sector and a three month payroll co-funding scheme worth £100 million, which can support up to 27,000 employees, that’s half the Island workforce and help keep islanders in their jobs during this difficult time.
“While the ultimate impact of Covid-19 is difficult to predict at this stage, the panel’s findings demonstrate the potential for a significant recessionary impact this year, seeing a short, very sharp fall in economic output in the next six months.”
“Thanks to our prudent approach to finances, Jersey has considerable reserves that have been built up over many years to respond to conditions such as this. The Government will not hesitate to leverage off our financial strength to bridge the economy over the coming weeks. My ministerial colleagues and I will continue to develop a package that will support the economy to take advantage of the recovery when the outbreak is over.”
The FPP forecasts include significant job losses, and a severe reduction in profitability particularly in the non-finance sectors of our economy. This level of impact aligns with the potential impact on neighbouring jurisdictions – including the UK and EU economies.
The Fiscal Policy Panel supports the government in considering a package of measures including:
- Liquidity and cash flow measures for businesses
- Support to maintain employment in affected sectors
- Support for individuals and households in hardship
- A temporary package to stimulate the economy
- A payroll co-funding scheme worth £100 million
Jersey’s Government has to date announced a broad package of support, including deferring payments of GST and Social Security contributions to support cash flow in businesses, a payroll co-funding scheme, £50m for the Jersey Disruption Loan Guarantee Scheme and up to £50m for a Special Situations Fund. Ministers will take the Panel’s advice into consideration in developing further support that will be necessary to safeguard the Island’s prosperity.
The FPP’s letter and a copy of a letter from the Treasury and Resources Minister to the FPP can be found on gov.je
Government of Jersey News Release.