Cash plans 'may damage economy'

Further spending could risk how Jersey deals with economic problems

Jersey's record for good economic management could be undermined by the States' recent spending decisions, according to financial experts.

The Fiscal Policy Panel has urged the States to tackle predicted deficits by not upping spending or reducing income.

It is concerned the Jersey government has spent unexpected tax revenue rather than saving it for a "rainy day".

Senator Philip Ozouf, the treasury minister, said: "I share the concerns about the structural deficit."

The panel is made up of three economic experts and advises the States on spending and tax.

The group reported that because of previous prudence, the island was well placed to cope with very difficult economic circumstances.

But it warned that further "new" spending would risk how the island could deal with fresh problems.

'More secure footing'

Joly Dixon, panel chairman, told BBC News: "While we believe that the States needs to be more careful in approving extra expenditure, it is encouraging that significant efforts are being made to strengthen the way that public finances are controlled.

"Now is the time to make sure that the States' finances are again put on a more secure footing from which to face some potentially difficult challenges in the years ahead."

Senator Ozouf said: "The deficit is manageable and not on the same scale as the deficits faced by many other jurisdictions, but it does need to be tackled.

"I believe that the fiscal strategy review and the comprehensive spending review are both critical if we are to meet the panel's requirements to keep States finances on a sound medium-term footing.

"The processes we have in place which govern the release of money to stimulate the economy are in line with the panel's advice, and meet the twin objectives of helping the economy through the downturn and not adding to the structural problems Jersey faces."