The lack of affordable housing in Jersey is posing a risk to the island’s economic growth and must be “addressed as a priority”, a panel of economic experts has said.
In its annual report released this afternoon, the Fiscal Policy Panel, warned that “there is a risk of reduced migration of key workers as the high cost of housing makes the island less attractive to potential migrants.”
The panel also told government that "interventions which boost short-term housing demand and support prices artificially are not desirable."
Housing was one of several key economic risks highlighted by the panel.
Elsewhere in the report, it warned that additional spending and tax cuts could threaten the sustainability of government finances and fuel inflation, which is expected to peak at 12% this winter before "slowly falling back to a long-run trend of 2.4%".
The economists also repeated their warning that there is insufficient money in the Climate Emergency Fund to cover the transition to net zero, that the Government had overly-ambitious timetables for capital projects, and that a higher retirement age and potential increase in Social Security contributions may have to be considered if the Government continues to pursue a policy of reducing inward migration.
Despite challenges posed by the worsening "global macroeconomic outlook", Panel Chair Dame Kate Barker said that "Jersey's economy is in a good position to weather global shocks."
"Jersey is in an unusual situation – the economy is strong and interest rates rises will drive higher profits in the financial sector which will, with a lag, result in higher tax revenues," she explained.
"At the same time, high inflation and rising interests are likely to create more immediate pressures for some households."
The panel advocates using surpluses to rebuild the Stabilisation Fund and Strategic Reserve, pointing out that the latter fund is below the recommended level.
Dame Janet added: "Additional spending and tax cuts are not prudent given the stage of the economic cycle, posing a concern to the future sustainability of government finances and and potentially adding to inflationary pressures.
"They will also limit the ability of the Government to provide targeted support or fiscal stimulus quickly should the economic outlook deteriorate."
The panel's recommendations include:
Adopting a fiscal strategy that steers a careful course between avoiding a sharp downturn and not overheating the economy.
Reacting quickly to provide additional targeted support should it be needed to counter the adverse effects of inflation, which the panel forecasts to peak at 12% by the end of 2022 before falling back.
Taking care to ensure major capital projects do not overlap, and identifying smaller projects which could be paused, or implemented quickly to support the economy.
Addressing the cost of housing as a priority, avoiding interventions which would boost short-term demand and support prices.
Reconsidering the strategy for financing these challenges.
Follow Express for updates...
Comments on this story express the views of the commentator only, not Bailiwick Publishing. We are unable to guarantee the accuracy of any of those comments.
Once your comment has been submitted, it won’t appear immediately. There is no need to submit it more than once. Comments are published at the discretion of Bailiwick Publishing, and will include your username.
Perhaps a way to help keep immigration to a level figure, is for the government to build temporary housing, for seasonal workers to rent at a stable price, thus giving arms-length assistance to agricultural sector. We need to grow more of our own food, hence such a plan may solve these issues.
The reason we have a housing crisis is 2-fold:
1. There are far too many people living on the island.
2. Developers and builders are buying up all the available housing stock and leaving nothing for everyday families to buy.
Until strict immigration rules are applied, this is only going to get much worse. What needs to be done is completely the opposite of what these people are recommending.