The Opposition leader accused the Government yesterday of spending “as if every year is an America’s Cup year” as Bermuda continued to struggle to balance its books.

Craig Cannonier said the island’s deficit and mounting government debt had been ignored by the ruling Progressive Labour Party.

Mr Cannonier was speaking after the Government said pay increases for civil servants were the main reason for a spending increase of 3.2 per cent in the first quarter of 2018.

Gross domestic product, the value of goods and services generated by the island’s economy, fell by 0.4 per cent during the same period when adjusted for inflation.

The Government’s Quarterly Bulletin of Statistics also showed employment income decreased by $15.5 million over the first quarter of the year.

Employment income in the public administration and defence sector increased by $7.1 million at the same time.

Mr Cannonier said former finance minister Bob Richards had predicted the GDP decrease in the first quarter of 2018.

He said: “The likelihood of Bermuda posting GDP year-over-year growth was always going to be very low, given the boost the economy had from the America’s Cup in the fourth quarter of 2016 and the first quarter of 2017.

“The notable feature of this report is that government consumption is up for quarter one of 2018, year over year.

“This is an indication of the absence of a realistic budget and tight spending controls.

“Government has kept on spending as if every year was going to be an America’s Cup year.”

Mr Cannonier added: “A prudently constructed budget would have foreseen this eventuality and budgeted accordingly.

“Thus, the deficit should have been reduced much more than it actually was.

“In fact, the last OBA budget planned for the government books to be balanced this fiscal year. Clearly, this is not going to happen now.”

Government workers, firefighters and teachers were all given a 2.5 per cent pay increase in the past year as the Progressive Labour Party fulfilled its pre-election pledge to conclude negotiations with public sector unions.

The GDP decline came after four successive quarters of real GDP growth in 2017.

The Department of Statistics said in its GDP report: “Government consumption increased 3.2 per cent due largely to an increase in salaries for public officers.”

Mr Cannonier added: “During quarter one 2017, we were still fitting out the final infrastructure improvements for AC35. This year we are not.

“This accounts for the large drop in investment in fixed asset formation.

“Also, consumption figures and imports are down for similar reasons — no AC35.

“The government deficit and the mounting government debt has disappeared from public debate under this new government.

“The problem, however, has not, and it cannot be ignored.”

But David Burt, the Premier and Minister of Finance, said: “Despite coming into office three months into the last budget passed by the OBA, this government met the spending target set in the 2017-18 fiscal year with prudent fiscal management and the deficit has been reduced.

“As laid out in the 2018-19 Budget statement, the projected 2017-18 operating expenses of the Government are $921.5 million, or $2.0 million — 0.2 per cent — lower than the $923.5 million originally budgeted in 2017-18.

“Our deficit came in at $119.2 million, $15.2 million less than projected by the OBA.”

Mr Burt added: “This was despite the millions of unbudgeted expenditures that we inherited from the OBA and also provided government workers with a much needed pay increase. A wage increase they hadn’t seen under the last government.”

He said: “The total number of persons contributing to social insurance as at June 2018 was 33,909.

“This was 322 more than were contributing in June 2017. The facts show that there are 322 more people working this year than there were last year.

Mr Burt added: “We have a fiscal plan to reduce and eventually eliminate the deficit and also a plan to grow the economy and will continue to keep the public informed as we move forward.

“This plan will include creating more jobs for Bermudians, providing training for new skills and ensuring Bermudian businesses have opportunities to thrive.”