Guernsey’s most senior politicians have warned revised GDP figures for the island don’t actually mean there’s any more money available for the States to spend.
The warning from the Policy & Resources Committee follows reports last month that a change in methodology meant the size of the economy grew from £2.4bn to £2.86bn.
Belief that could mean more money to spend was reinforced this week with the publication of the Annual Independent Fiscal Policy Review 2017 whose authors said the higher GDP meant the government was falling short of its spending limit of 28%.
The revised figures mean the States of Guernsey’s revenues are currently 21% of GDP.
Deputy Gavin St Pier, President of the Policy & Resources Committee, said: “It is important to highlight that the economy hasn’t changed as a result of the restatement of GDP, it is the data that has changed. There is no new money. As such, while there may be political appetite in some quarters to increase the amount we spend on public services, as a result of the new GDP data highlighting that the government’s share of the economy is low, the only way any higher spend can be funded is by higher taxation.”
Deputy Lyndon Trott, Vice-President of the Policy & Resources Committee, said: “Notwithstanding P&R’s position on the need to refrain from increasing taxes unless essential to do so, as stated by the Committee in December when the new GDP figures were published we are, as a result of the GDP restatement, reviewing the implications for States of Guernsey policies and will report back to the Assembly in June with any recommendations. In the meantime, I am pleased that the authors of the report have recognised the value of the planning process undertaken through the Policy & Resource Plan and the Medium Term Financial Plan. They have also acknowledged that the States’ finances have improved as a result of fiscal responsibility and discipline.”