CGi backs States approach to borrowing but emphasises caution

THE Confederation of Guernsey Industry supports the States’ approach to borrowing announced last week, particularly in this first phase. There is a clear and immediate requirement to address the impending cash flow shortfall given the considerable sums that are being spent in helping businesses and the economy in general coupled with a simultaneous reduction in receipts.

The States should be credited for its swift response to tackling the economic issues faced and also its willingness to engage with industry and take on board feedback.

As far as the second tranche of borrowing is concerned, we broadly support the need to create the facility should the initial £250m prove to be insufficient.

The approach, however, needs to be coordinated and apply sufficient focus and rigour to any infrastructure-related capital expenditure to ensure that optimal outcomes are achieved for stimulating the economy through employment, a return in confidence and the multiplier effect.

Key to this is project selection. We believe in prioritising those initiatives which provide strategic value, expedience and also those that can be started and completed quickly, which, of course means some should be deferred.

Ultimately, this borrowing will have to be repaid and we do not advocate tax increases of any sort as that would have implications for the economy. There should, instead, be a reduction in the States’ cost base which would act as a contributor to future surpluses and no dramatic change in strategy going forward.

The right balance must be found that sets the right level of expenditure now and does not make the future repayment of these huge sums too onerous.’

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