Minister warns of 'fiscal cliff’ as he outlines recovery plan
An economic recovery plan for Bermuda will include high-earning new industries such as medical tourism, vertical farming and residential schemes, MPs heard this morning.
Curtis Dickinson, the finance minister, added the casino industry, sub-sea communications and a space strategy were among industries with “the largest expected impact relative to the Government’s commitment”.
Mr Dickinson warned the island “finds itself on the edge of a fiscal cliff” as he detailed an economic recovery plan.
It comes in the wake of a 9 per cent contraction of the gross domestic product for 2020, caused by the Covid-19 pandemic.
Mr Dickinson said the plan included “making financial markets work better for businesses and consumers” through moves including lowering interest rate and the formation of a national digital bank.
Mr Dickinson also highlighted projects for new infrastructure or the enhancement of existing infrastructure, as well as expanding the resident population, and labour market reforms such as a youth employment strategy and establishing national unemployment insurance.
He said the economic impact witnessed over the past year had been “much more severe than any downturn in recent memory” and had come on the back of a decade of low growth for the island.
The economic recovery plan was developed in three phases with “detailed input from across the various ministries” in the past six months with “extensive input around the Cabinet table”.
Mr Dickinson said the ERP “blueprint” includes a “most likely” path for Bermuda based on “reasonable and prudent assumptions of what recovery in each of Bermuda’s sectors could look like”, and a “severe” path if “reasonable underlying assumptions do not occur”.
He added: “In the ’most likely’ scenario, there is a relatively strong recovery and GDP returns to its 2019 level by the end of 2022.”
In the “severe” scenario, recovery is “sluggish in 2021 and GDP remains roughly 10 per cent below its 2019 level in each of the next four to five years.
Mr Dickinson said the Government was addressing threats to Bermuda’s international business from the Organisation for Economic Co-operation and Development’s focus on Base Erosion and Profit Shifting, and the European Union list of non-cooperative tax jurisdictions.
He added: “We will also support efforts of our international business sector to be a leader in the highly competitive search for climate-related financial opportunities.”
Mr Dickinson said: “While the future remains deeply uncertain and economic risks are mostly on the downside, the ERP provides a blueprint for a successful recovery.
“Effective implementation is now necessary to ensure that Bermuda maintains fiscal prudence and forges a new path to growth, employment and greater equity.”