Toughest situation for "donkeys' years"

Tuesday 04 October 2022

As Guernsey's 2023 Budget is released the Chief Minister has reiterated comments he made last week, summing up the island's financial situation as "the toughest situation for the proverbial donkeys' years...many and many years".

Deputy Peter Ferbrache told Express that we are in a "real period of uncertainty" and that while Guernsey isn't alone in that, the island will have to face up to, and make, some tough decisions.

Those tough decisions will reach a peak in January, when deputies will be asked to vote through a package of measures to modernise the island's tax systems. Plans for that will be revealed in November. 

Yesterday saw the 2023 Budget shared with States Members and then the media before being published at midnight.

Immediately after the earlier presentations, both the President of Policy and Resources, and the Treasury representative on P&R, Deputy Mark Helyar continued to outline the island's economic position - with "uncertainty" being a key word.

"We finished the budget report on Friday, even since then there's been increased volatility and threats to major international banks. They're all very concerning," said Deputy Helyar.

"It looks like some of the symptoms of the credit crunch two, portfolios losing their value and needing to be re-collateralized, leading to a shortage of capital in those institutions."

Pictured: Deputy Mark Helyar outlined his 2023 Budget for Guernsey yesterday, before it was published in full at midnight.

In a foreword with the published copy of the Budget, which can be read HERE, Deputies Ferbrache and Helyar warned that their financial plans are "presented against a longer-term backdrop of a significant structural imbalance in States’ finances. The expenditure pressures set out in this Budget are indicative of underlying trends and there is little scope for raising additional revenues through the existing tax system."

Deputy Helyar has held his position as Treasury lead for the States since the October 2020 election, He told Express that when he took on the role the States' 'books' were worse than he had expected and that nearly half-way through this term of office the situation has worsened due to outside pressures.

"They're significantly worse than I thought. Everyone's known about the demographic issue and that's still there in the background as well, but all of these inflationary crashes, the difficulties associated with Brexit, finding staff, and all those things have all come out of the blue at the Budget and it's causing significant pressure for public finances."

With the 2023 Budget offering increased personal allowances, a cap on TRP for many homeowners, and some revenue raising measures to pay for those, Deputy Heylar said that's about the limit of what they can do. 

"I'd like to do more but there just isn't any leeway, there just is no more cash. Even doing what we've done here which hopefully redresses some of the burden by the better off paying more, and the less well-off receiving benefits or more allowances. But it's a very, very, slim margin for us to navigate and not just that, but with capital as well."

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