Jersey is anything but immune

In economics as in warfare the first casualty is almost always the plan, yet few would object to the principle of forecasting. It is clearly essential as one of the foundations of policy-making.

That said, there have been legitimate objections to the nature of certain forecasts in the Medium-Term Financial Plan. Specifically, a number of people who are by no means economically ignorant have said that projected annual growth rates are hopelessly optimistic. In addition, even Treasury Minister Philip Ozouf appears to be having doubts about the targets – doubts which may well be shared by the independent assessors of the Fiscal Policy Panel.

With so many economies still reeling from the effects of the global recession and with experts saying that the UK economy is destined to remain flat, growth projections in the region of five per cent can only be described highly questionable. So why was this Island’s interim financial plan so bullish?

At least two lines of reasoning have been advanced. Firstly, it has been pointed out that the Island is looking not to the world’s challenged economies for growth but to the Gulf, to the Far East and to South America for new finance business. Secondly, it has been claimed that our economic fortunes are not closely linked to the UK, the Eurozone, or, indeed, other economically challenged regions.

As far as argument one is concerned, thriving areas of the world may well offer rich pickings for our financial services industry – which, manifestly, is the principal engine of our economy. However, the extent to which the Gulf or the East will actually be our saviours has yet to be seen.

And there is a further problem. Prosperity in a single sector is one thing, but if it is to contribute to the general welfare of the Island and Islanders there must be sufficient trickle down of money to benefit other sectors and also an appreciable boost in tax revenue.

Meanwhile, argument two is less than compelling. We might well be independent of the worst of the UK and the Eurozone’s woes, but can we really be confident that what happens in the outside world has a limited effect on our wellbeing? Recent harsh experiences suggest otherwise. It is, frankly, quite obvious that we have been anything but immune to unpredictable forces utterly beyond our control over the past four or five years.