Hiking taxes will not deal with Bermuda’s massive deficit, a top economist has warned.

And Peter Everson, who runs PE Consultants, said there was no “silver bullet” to deal with the Island’s debt of around $2 billion.

“Many people were looking for a silver bullet. Rather than one great idea we have to execute, it’s boring, dull, hard work and not the magic bullet,” he said.

Mr Everson was speaking at a meeting of Sandys Rotary Club, where he talked to members about the way Cayman Islands had dealt with its debt problems.

He said that the Caymans had moved from a deficit of $81.1 million on their annual budget in 2008-09 to a budget surplus for 2014-15.

Mr Everson said that the Caymans had increased its population by importing people, while Bermuda’s population had fallen in recent times, largely due to the departure of overseas workers.

He told Rotary Club members: “If you have more people working, then, mathematically, production goes up. That’s the key thing about Cayman in recent times — the number of people in the workforce.”

And he said: “If all Bermudians were employed full-time, the Government wouldn’t balance its books. There would still be a gap.”

Mr Everson said that Cayman — which has a different constitution from Bermuda — had had its budget rejected by the Governor in 2009 and a report commissioned into the economy.

The external Miller Report concluded that Cayman needed to curb government spending, the civil service was too large and a public sector pensions time bomb was ticking.

The Miller Report also said that Caymans’ economic base was too narrow, with a heavy dependence on international business and tourism, and that increased taxation on its own would not help the country gets its books out of the red.

Mr Everson added: “If you take Bermuda’s economy and Caymans’ economy and send them off to a DNA lab, you would probably get an 80 per cent match.”

And he said that both Bermuda and the Cayman Islands watched each other’s policies and used each other as “a little bit of a laboratory” before adopting new initiatives.

Mr Everson said that the Caymans had opened a new private hospital to cater for medical tourists, hotels were being regenerated, while its infrastructure was being renewed with a new airport and cruise ship terminal.

He added: “This is how direct foreign investment is coming through — initially to create construction jobs and gradually coming through to provide more permanent jobs.”

And Mr Everson said: “The big difference is the amount of land they have in Cayman. There has always been a large amount of undeveloped land in the Caymans.”

And he added that the increase in immigration to the Caymans and the increase in its Gross Domestic Product (GDP) were “directly linked.”

Mr Everson said there had been “relaxations” in Bermuda’s work permit policies recently, but said that had “not been without controversy” and “a knee-jerk reaction” that Bermudians were unemployed and should be taken care of first.

But he added: “That means Bermudians are either lacking the appropriate skills or they choose not to take a job because it doesn’t pay the wages they would like.”

Mr Everson said that Bermuda could push alternative energy like wind and solar power to create new industries and cut the cost of power generation.

But he added that any new businesses would need both capital and people to work in them.

He said that the America’s Cup would boost the economy, with investment by government and the organisers as well as assist the hotel industry — but he said that new hotel projects, while “useful” would not generate enough money to generate a Government surplus.

And Mr Everson said: “We have got a good base in Bermuda but we got to build on that. Whatever we do, Bermuda will be a lot different from what it did five or ten years ago and we need to embrace that.”

And he urged young people — who will be responsible for paying the pensions of the baby boomer birth bulge as they retire — to make their voices heard.

Mr Everson said: “They have the biggest skin in the game — it’s great to see some of them say they are frustrated and can’t find a job, so they’re jumping up and down to start their own businesses. That’s great and I hope they flourish, but that on its own won’t be enough. We need to do something more radical.”

And he added: “We’ve got to put away personal preconceptions, we have to embrace the idea that the changes will be substantial and when we move, we must move with lengthy and substantial strides.”