Guernsey's Fiscal Policy Framework Amendment 2

1. In Proposition 2, to insert immediately after the words “Fiscal Policy Framework” the following “, and, where relevant, an analysis of how decisions will impact compliance with the Framework and, where relevant, an assessment of the likely economic implications of proposed fiscal restraint, delay or reprioritisation, together with an explicit acknowledgement where material economic trade-offs are being accepted”.

2. In Proposition 1, to insert immediately after the words “defined within it” the following “, subject to the following amendments:

“1.In paragraph 3.4 of the Policy letter, to insert the words “and inflation” after the words “exceed the rate at which growth”.

2.To delete paragraph 3.5 of the Policy letter and replace with the following:

“3.5In a small jurisdiction the trajectory of growth can be volatile and highly susceptible to external stressors, many of which lie beyond the island’s control. It does not, however, diminish the importance of ensuring that fiscal decisions are designed to support sustainable economic activity, productivity and resilience, recognising that even modest and well targeted improvements in economic performance materially strengthen the Island’s long-term fiscal position and its capacity to fund public services sustainably. Increased economic growth must remain a vitally important element of any forward-looking strategy if the demographic and standard of living issues of the Island are to be addressed.”.

3.To delete paragraph 3.6 and replace with the following:

“3.6Whilst it is essential to run a disciplined balanced budget over the rolling medium term, this must be done in a way that actively encourages and does not restrict economic growth.”.

4.To insert an additional paragraph after paragraph 2.7:

“2.7AIn applying this Framework, medium and long-term fiscal decisions should be informed not only by their impact on income, expenditure, reserves and debt, but also by an assessment of their likely effects on economic activity, productivity, labour participation and the Island’s long-term economic resilience. This is intended to ensure that fiscal sustainability and economic sustainability are considered together, recognising their interdependence.”.”.