Recently released statistics showing a steady decline in new exempt company formations provide a clear warning that Government should spend less and come up with a concrete economic plan, says Shadow Finance Minister Grant Gibbons.

And he warned against forcing the international business sector to shoulder the burden of lower revenues.

The Bermuda Monetary Authority's (BMA) latest quarterly report shows that the highest number of new company formations for the last six quarters, occurred in the second quarter of 2000 when 492 exempted company applications were approved.

But it has been downhill since.

Just 391 new exempt companies were formed here by the end of the third quarter of 2000.

In the final quarter the figure was 378 and in the second quarter of this year only 321 new exempted companies were formed in Bermuda.

"It's a clear indication of a downward trend," said Dr. Gibbons.

"In the first half of 2001 the number of new companies dropped by 228 versus the same period last year.

"That represents a 26 percent decline."

Dr. Gibbons described the trend as "worrying" as it indicated that "the second pillar of our economy is experiencing weakness in its growth."

And he said the effects of the September 11 attacks on the United States will add to the pressures on the growth of the international business sector.

He pointed out that visitor spending declined by $51 million last year.

"It's a pretty ugly picture," said Dr. Gibbons.

"The first half of 2001 will be much worse."

Dr. Gibbons has already gone on the record to say that Government should cut unnecessary spending because the impact of "dismal" economic performance is to reduce revenues.

The most recently published economic indicators (the BMA also reported a decline in the balance of payments surplus) are "yet another signal that Government should look at cutting unnecessary expenditure", he said.

"Furthermore, it would be very unwise to significantly increase fees on exempt companies and international business.

"I know there will be a great temptation to do so, but it will be unwise to push that additional expenditure on international business."

And referring to Premier Jennifer Smith's recent pronouncements that the events of September 11 meant additional spending, he said: "The signal we're getting here suggests that Government should be looking at spending even less or reallocate their current spending."

Ms Smith, speaking on ZBM television shortly after returning from London for the Overseas Territories Consultative Council Meeting and the UK Labour Party conference, warned of "extra burdens" on the purse strings in the wake of September 11.

She said : "We just have to shoulder the burden, as the rest of the world is shouldering the burden, of meeting and coming to grips with the increased level of security that is necessary.

"And, of course, as a choice destination we want all travellers - both local and tourists - to feel comfortable and safe in Bermuda.

"And that's going to mean an increase in cost."

Ms Smith also defended her travel on Government business saying while some meetings could be cancelled, others - like the Overseas Territories Council meeting - became more important because of the September 11 attacks on the United States.

Dr. Gibbons insists, however, that Government is still not showing any leadership.

"In place of a plan to address Government spending all we get is silence," he said.

"Instead of visible leadership from Government we've had a leadership vacuum and more overseas travel.

"We believe what the community is looking for is information and reassurance and a clear sense that Government is looking to cut their expenditure and planning for what is likely to be a very difficult stretch ahead."

Dr. Gibbons is not impressed either by Works and Engineering Minister Alex Scott's revelation to this newspaper recently that he was looking at alternative financing for capital projects to free up funds.

"I have no problem with Mr. Scott coming up with ideas," said Dr. Gibbons.

"What we need now is something concrete - a clear plan of what we need going forward.

"That is completely absent."

Finance Minister Eugene Cox is off the Island and unavailable for comment.

Government has, since the September 11 attacks, established a task force of senior civil servants to serve as a clearing house for various policies.

Two weeks ago, Mr. Cox, in his capacity as Acting Premier said that Government and Cabinet "intend to articulate a number of initiatives to spur growth, while seeking to provide a safety net for those in the community who are most vulnerable at this time.

"We are prepared to assist and we want to support local businesses and our work-force in a tangible fashion."