Economic Recovery
Political Oversight Group
REPORT TO ACCOMPANY MINISTERIAL DECISION
Introduction
The COVID-19 response by governments around the world has severely restricted domestic and cross-border economic activity. Our response in Jersey is no different as we rightly prioritised Lives, Livelihoods and Well-being in a response that continues to be led by public health advice.
Economic and societal dislocation of this magnitude has not been experienced in the lifetime of most islanders; this combination and its severity give rise to the need for more fundamental thinking towards recovery than usually expected in a traditional economic cycle. Plans for recovery also need to take account of a forecast recessionary period following on from the relaxation of Coronavirus-related restrictive measures.
This paper sets out some early thoughts on how we might structure resources around economic recovery planning (as distinct from the Government of Jersey Recovery Plan being a successor to Government Plan 2021) as well as some food for thought on the ground that needs to be covered and areas for likely investment.
Economic Outlook
The Fiscal Policy Panel letter of 23rd March 2020 provides support to many of the ‘in-flight’ initiatives underway to support islanders and businesses through the restrictive measures period. Fundamentally, the Panel points to measures being applied elsewhere and indicating these equally apply to Jersey.
The Panel also revised Jersey growth forecasts (Table 1) down by 6.3% in 2020 but capturing a large part of this back in 2021. The Panel does, however caveat this position in commentary by saying:
“The Panel has not at this point cut its forecast for the long-term rate of ‘trend’ growth. This will be reviewed as the potential long-run impact of the global pandemic becomes clearer. Jersey is clearly vulnerable to any reduction in the interconnectedness of the global economy, and any permanent reduction in travel could pose further challenges for sectors that rely on visitors. More broadly, the reduction in demand could result in a permanent reduction in capacity if there are firm closures or significant downsizing”
Table 1: Fiscal Policy Panel forecasts – 23rd March 2020
The IMF has advanced publication of its May 2020 Global Financial Stability Report in the publication of Chapter 1 earlier this month. The data tables make for grim reading and are captioned with headings such as:
- Short-term funding markets – under stress
- Market liquidity conditions – under strain
- Asset valuations – wild swings
- Global financial conditions – getting tighter
- Investment funds – increasing outflows and losses
- Banks in large economies – growing investor concerns
- Shrinking monetary and macro prudential policy space
Detailed economic forecasts are thin on the ground and likely to vary markedly given the uncertainty of current market conditions, Coronavirus curves, second outbreak risks etc. However, if financial market conditions are a weather-vane this would point to a constrained outlook and possibility of a wider financial crisis to follow.
Building a new economy
An early, strategically focussed dialogue on our future economy must be a high priority within the overall plans for island recovery. This dialogue must bring together a broad base of internal and external opinions within an over-arching governance structure that can drive and challenge timely delivery of this essential work.
The first phase of economic challenges arising from COVID-19 give rise to a number of interesting observations on the present state of Jersey’s economy and society that require careful reflection ahead of any new economic strategy. This serves to highlight the breadth and depth of considerations that are necessary as well as the political and societal challenges to resolve.
Political Oversight Group – context and membership
The POG will sit at the top of a newly created governance and delivery structure.
The Political Oversight Group will sit above the Economic Council and a High-Level Working Group. The High-Level Working Group.
The membership of the Political Oversight Group will be:
Political members:
The Chief Minister (Chair)
Minister for EDTSC
Minister for Education
Minister for External Relations
Minister for Treasury and Resources
External members:
Wendy Martin – Global Head of Tax, CVC Capital Partners
Andrew McLaughlin – CEO, RBS International
John Riva – Partner, KPMG
Gerald Voisin – Chairman, Voisins
In attendance:
Chief Executive
Director General, Economy
Director General, Treasury and Exchequer
Group Director, External Relations
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