THE Fiscal Policy Panel, the body of experts advising the States on economic matters, has given notice that recovery from the global recession will be a longer process than many had forecast. This will clearly be of importance in Jersey in spite of the relative strength of the Island’s economy.

Fortunately, that strength – founded on the absence of debt and substantial public reserves – means that positive action can be taken to speed up economic resurgence. Unlike so many other communities, the Island can afford to spend to spur industry, to help create jobs and to boost tax revenues.

For many months government strategy seems to have focused on cuts, the control of public spending and increased taxation, though we should not forget that there has already been one round of fiscal stimulus.

Now a second round is planned and it will be directed largely at capital projects which will produce knock-on beneficial effects for the economy as a whole. Some £37 million has already been allocated for projects ranging from a new police headquarters building to improvements to the St Helier flood prevention scheme, but total capital investment is likely to amount to some £80 million.

This spending, proposed by Treasury Minister Philip Ozouf, should be widely welcomed. As well as injecting new life into our currently sluggish economy, it would emphasise that we do not have to remain passive in the face of difficult circumstances. In contrast to jurisdictions which are frantically casting around to find new sources of funding to kick-start vital commercial activity, we have sufficient resources to begin the procedure with cash in hand.

However, as Senator Ozouf has indicated, our relatively favourable position does not mean that the horizon is free of dark clouds. We have just seen the publication of discouraging cost of living figures, the fulfilment industry is under terminal threat, and there are, as yet, few signs of e-commerce and e-gaming becoming major new forces in the economy.

Therefore, although the capital spending now on the table offers hope of a brighter future, it is unlikely that the more general mood of austerity will lift substantially until changing conditions in the wider world allow finance, still our number-one source of earnings, to pick up speed and return to the levels of performance seen before the recession began to bite.