IT is difficult to lay down hard and fast rules about when a recession deteriorates into a depression, but the generally agreed threshold is a decline in economic performance of at least ten per cent for a protracted period. Jersey is not in this dire condition, but the definition of depression serves as a benchmark and an indication of just how seriously we are likely to be affected by the present global downturn.

Figures revealed in relation to the Strategic Plan consultation document, which is published today, forecast a potential shrinkage in the Island economy of six per cent this year. This contrasts sharply, dramatically and alarmingly with a previous forecast of two per cent growth.

Treasury Minister Philip Ozouf stresses that the six per cent decline is a worst case scenario, but it is abundantly clear that neither he nor the Chief Minister, Senator Terry Le Sueur, believes that the Island is in for an easy ride. Indeed, talk about the stability and resilience of the economy is being replaced by warnings about belt-tightening and the urgent need for public sector cutbacks that are unlikely to be met through greater efficiency.

But it is not all doom and gloom. Even though it is anticipated that economic performance next year will be in the range between zero growth and a four per cent decline, we are better prepared than most communities to cope with adversity. This is because we have money in the bank in the shape of the Stabilisation Fund – not to mention other reserves.

Senator Ozouf has promised that the whole of the Stabilisation Fund – some £140 million – may be used to counter the effects of recession, while Senator Le Sueur has said that the States has a responsibility to ensure that vital funds are not spent on ‘fanciful’ ideas.

It remains to be seen exactly what sort of plans are being made so that the £140 million available promotes economic activity and cushions the recessionary blow. However, all our politicians would do well to remember that the money can be spent only once and that it is imperative that it is not wasted.

Meanwhile, if there is a further crumb of comfort to be discovered it relates to the famous ‘Rainy Day Fund’, the public reserve to be held back until the very worst happens. We should be relieved that, as yet, there is no suggestion that ministers should start asking for the key to the vault containing the last of our hard-earned savings.