SOME of the headline figures in the States Financial Report and Accounts for 2010, which were published earlier this month, paint a frankly disturbing picture of the Island’s performance.

The effects of the recession and other factors meant that States income was £128 million lower than in 2009, a drop of 19 per cent. In addition, a deficit of £70 million was recorded after all the sums had been completed.

Those, however, are the principal negative elements of the accounts. In rounder terms, the final picture was not as bleak as they might suggest.

To begin with, the deficit was lower than anticipated. It was forecast that the Island would be in the red to the tune of £97 million by the end of last year, but although income clearly took a severe hit, it was higher than expected and the final position was not as bad as it might have been.

Claiming that matters could have been worse might look like grasping at straws, but there are other reasons why the 2010 accounts provide no grounds for despair. Indeed, government would say that as well as being marginally more favourable than expected, the final figures describe public finances which are favourably positioned to bounce back not only from the recession but also from other external forces which have prejudiced the tax take.

For example, the annex to the accounts, a hefty document which analyses the performance of individual departments, shows that there were a host of departmental underspends last year – which helps to support government’s claim that, at last, real savings are being made.

Additionally, in sharp contrast to so many other communities around the world, this Island has no public debt and continues to avoid the temptation to borrow. Indeed, the Strategic Reserve is, at £587 million, healthy, having been boosted to the tune of £36 million by the end of last year.

The pounds and pence element of the Report and Accounts will, no doubt, be of principal interest to most Islanders, but the very nature of the document is also significant. That the Treasury has successfully moved to report according to Generally Accepted Accounting Principles is likely to impress only those with specialist knowledge.

That said, even the uninitiated should be pleased to know that GAAP accounting produces a fairer, more complete and more transparent view of how our public sector is faring.