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Annual Independent Fiscal Policy Review published

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Friday 26 January 2018

The States of Guernsey continues to exhibit tight control of its budgets, the authors of the Annual Independent Fiscal Policy Review 2017 have said.

The review, published today [26 January 2018] and authored by Dr Andrew McLaughlin and Prof Geoffrey Wood, provides an independent assessment of the States of Guernsey's performance against its own financial rules, as laid out in the Fiscal Framework, and gives an overview and assessment of key risks.

While usually published between the publication and debate of the Budget, the 2017 review was delayed while Guernsey's Gross Domestic Product figures were under review following work to update the methodology by which GDP is calculated.

Professor Wood said:

'The States of Guernsey continues to exhibit tight control of its budgets, with outturn estimates for 2017 showing an overall underspend against the original budget. In particular there has been marked progress in controlling Health & Social Care spending in 2017; an area where there has often been spending in excess of budget in the past. This, combined with slightly stronger than expected receipts, means that 2017 is anticipated to report a second successive budget surplus.

'The 2018 Budget also shows a significant step towards meeting the 3% of GDP target set for the allocation to capital spending. However, the upward revision of GDP means that the States are still falling short of this target and more work is needed to ensure that both the long term balance of the Budget and the investment in infrastructure are sustainable.'

Dr McLaughlin said:

'The revision of GDP has significantly impacted on the Framework criteria. For example, the total size of Government revenues (including the social security system) as measured against the revised data is significantly lower than previously thought at 21% of GDP, while the monetary value of the 28% of GDP limit placed on it has increased. Further the 3% of GDP target for capital spending, which the States have struggled to achieve since the Framework was introduced in 2009, is now even more challenging.

'It is evident that it will be necessary to review the criteria set out in the Framework in light of the revision of GDP and this is an opportunity for Guernsey to revisit the debate on the size of its government. The government share of the economy is low relative to international norms and other similar off-shore finance centres. The review of the Framework therefore presents an opportunity to consider where Guernsey wishes to position itself in the long term.'

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Annual Independent Fiscal Policy Review 2017

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