Ministers follow expert advice to maintain plan
Ministers have issued updated, post-Brexit income forecasts to inform States Members about Jersey’s latest financial position before the upcoming debate on their proposed financial plan. The latest economic assumptions from the Fiscal Policy Panel (FPP) showed a slight slowdown in the economy in the short-term and a reduction in income of £6 million (or 1% p.a.) from 2017 onwards, mainly in personal income tax. Ministers are proposing, as advised by the FPP, that there should be no change to the existing proposals in the MTFP Addition.
The update includes:
· the latest States income forecasts (next forecasts due for the draft Budget 2017 in October 2016)
· an explanation of the impact of these forecasts on the overall financial position for the MTFP Addition.
· draft proposals from the Council of Ministers to address the change in financial position
The Chief Minister welcomed the panel’s conclusion that the broad approach and package of measures proposed in the MTFP Addition was still appropriate following the UK referendum on BREXIT. Senator Gorst said “The FPP’s advice is clear - we have a plan and we should stick to it. The Brexit vote has added additional uncertainty to the local economic climate but we must ensure that in agreeing the MTFP Addition we do not take knee-jerk decisions and thereby add to that uncertainty.”
The Treasury Minister, Senator Alan Maclean, said “We will be proposing to States members that no change is made to the package of proposals at this stage but that a further withdrawal from reserves be considered in 2018 if required to support the economy at that point. This is consistent with the Panel’s advice for this MTFP to use reserves rather than propose more measures to raise money or reduce spending.
“The reduction in income forecasts is slight and we are maintaining flexibility with further small transfers from the Strategic Reserve at each annual Budget. We are confident such transfers are sustainable as our reserves are in a healthy state and forecasts for the performance of the Strategic Reserve have improved.”
The Council of Ministers has accepted all the recommendations in the 2016 Annual Report published by the Fiscal Policy Panel (FPP). The report provides independent, expert advice for States Members before they debate the MTFP Addition and explains the economic and fiscal outlook that Members need to consider as they decide on Jersey’s direction for the next three years.