'Chronic' underinvestment limiting growth - report

Continued "chronic underinvestment" in public infrastructure could leave the States of Guernsey's reserves empty by 2032, an expert panel has warned.

A report by the Fiscal Policy Panel said a lack of expenditure on the island was an "increasingly binding constraint on growth, fiscal sustainability and living standards".

It is recommending the government ups its investment target to an average of 3% of Guernsey's gross domestic product (GDP). The island's current target is 2%, which the report highlighted "has not been consistently met".

The report was commissioned by the Policy and Resources Committee. The BBC has approached the committee for comment.

The report said Guernsey's capital investments had averaged 1.2% of GDP from 2016 to 2023.

It suggests that if the States bring in proposed tax reforms, the island's reserves for future investment will improve.

But, given that Guernsey's public infrastructure investment is low compared to jurisdictions like Jersey and the UK, the panel believes a 3% average would be "preferable".

The target does not include investment in housing, which the report said would need to be additional because "financing of new housing should be possible without it competing for capital funds", according to the report.

Dr Agarwala, chair of the panel, said the island was also in need of "a streamlined approach to long-term infrastructure planning and delivery".

The report said "stop-start decisions" relating to infrastructure projects could increase costs and create uncertainty, leading to further delays.

It also highlighted that the island's ageing population would "place increasing demands on healthcare, pensions and social services".

The issue made it all the more important to "ensure that savings, reserves and other public assets are sufficient to meet future liabilities," the report said.

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