Jersey's Fiscal Policy Panel (FPP) has updated its advice following the EU referendum. It will continue with its Medium Term Financial Plan (MFTP) to support the economy in the short term but return the budget to balance by 2018/19.
The report comes in response to a letter from the Treasury and Resources Minister asking whether previous FPP advice should be changed in relation to the economic outlook and/or approach to fiscal policy.
FPP Chair Kate Barker said: "The result of the referendum has created considerable uncertainty in the UK and will have wider impacts. Jersey therefore needs to ensure it retains sufficient flexibility to be able to adapt to changes in economic conditions as they become clearer."
Brexit is likely to have implications for Jersey’s economic growth, says the report, and for the rate of inflation and monetary policy decisions in the UK.
The FPP has reviewed the existing assumptions for each of these indicators but does not believe there is sufficient information available to make a coherent set of revisions. It is not yet clear what the scale of any impact might be or whether any impacts are likely to be temporary or permanent.
Dame Kate added: "The Panel believes the risks for Jersey have increased following the vote, but does not consider this warrants any significant deviation from the approach recommended previously.
"The MTFP sets a clear path for fiscal policy for the next few years and ad hoc adjustments to that path should not be made while the impacts of the UK’s referendum remain so uncertain. A sensible approach is to maintain course until there are clearer indications of how the Jersey economy is being affected."
The FPP will publish its next Annual Report in August 2016.