Government budget deficit grows beyond predictions

Guernsey's Royal Court building
Image caption The deficit has risen because of falling revenues and pressures on health services, according to Guernsey's most senior politician

The government budget deficit has grown to leave Guernsey's States £4.5m worse off than expected, its most senior politician has said.

Deputy Gavin St Pier said that despite a "sound economy with growing confidence", this was not reflected in tax receipts.

The last annual budget predicted a deficit of £20m but the figure is now £24.5m.

Deputy St Pier said it was due to lower revenues and pressures on health care.

He told fellow States deputies: "The current forecasts show a deterioration in income tax of some £5-8m against the budgeted position.

"In addition, customs duties and document duty were also lagging against expectations in the first three months of the year which could translate into a budget shortfall of some £2-3m.

"This is despite the growth and increasing confidence in the economy."

He said as well as falling revenues, health and social care services were forecasting an overspend in 2016 despite an increased budget for the department in 2015.

Responding to the announcement in the Assembly, Deputy Matt Fallaize said: "Since 2009 our economy has grown in real terms by more than 10% and yet the size of the deficit is essentially the same as it was then.

"It's quite clear that it would take spectacular levels of economic growth to deal with the deficit."

He asked Deputy St Pier's committee, Policy and Resources, to come back to the States with plans to raise additional revenue.

Deputy St Pier said: "The Policy and Resources Committee has commenced its work on the 2017 budget and aims to propose a package of measures to the States which will start to deliver sustainable public finances for 2017 and the longer term."

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