*Chief Minister Picardo admits now that public spending needs to be prioritised
*Admission of dismal state of public finances
*Mismanagement of public finances for years
*Picardo doing too little too late with hands tied by growing recurring expenditure
*Public sector pay claims will worsen public finance position
*Difficult imminent budget could prejudice election chances
*Any Gibexit ‘deal’ announcement in March will hint at an early pre-election budget
*‘Remote control government’ by the UK as in the British Virgin Islands


At last, the GSLP-Liberal Chief Minister, Fabian Picardo, utters some wise but worrying words on the state of public finances. In answer to a question in Parliament about the airport tunnel, he emphasised and admitted finally that public spending had to be prioritised at a time of deficit.

He said, “there are many things to do in Gibraltar that cost a lot of money. Government is about prioritising that spending. And when we prioritise that spending, it may not be visible that we spend on something else which matters more, but it matters more.”


The admission of the dismal state of public finances in terms of the public deficit came in answer to questions about the imminent opening of the airport tunnel, “el cuento de nunca acabar” or “the tunnel that time forgot”.

It signals the reality that public finances have for ages been mismanaged. It is only now when the available cash flow is insufficient to meet outgoings that care, and prioritisation, seem to have come to the fore in the minds of Mr. Picardo and his Government.

The writing has been on the wall for years. There are few who have publicised the reality of public purse overspending and public overborrowing. Those who have were the subject of criticism and were labelled ‘merchants of doom and gloom’.


What Mr. Picardo’s GSLP-Liberal Government is doing now is too late, additionally only too little can be done, as much expenditure that past governments have imposed is recurring (and growing) public expenditure. The main option now is increases.

Covid has accelerated matters, but it is not the cause of the difficult financial situation that faces Gibraltar. It was prior financial mismanagement that had put Gibraltar in a weak financial place already.

At all times public spending and the commitment to recurring (and growing) public expenditure should have been prioritised. It was not.

Unfortunately, those of us who preached the message of financial prudence were ignored. The political ambition that fed the desire to win elections was too great. It beat the need to ensure the stability of public finances. Accordingly, the opposite is true, misspending and extravagance ruled.


To make matters worse, pressure on public recurring expenditure increasing is visible all round. There are clear signs that trade unions are rallying to pursue pay increases. Those include pay claims in the public sector.

One example is that Unite the Union is currently balloting its members to bolster its imminent negotiation for more pay and better conditions in the public sector. A meeting with the Government about increases in pay is scheduled for later this month.


The Unite move come just before this year’s budget which should prove interesting, especially if it comes before the general election, which must be held before the end of February next year.

The budget will need to cater, not just for the deficit and the need to pay down public borrowings, but any effect on public revenues of pay increases and the prospects of a Gibexit ‘deal’ or ‘no deal’, yet not prove too unpopular for the current GSLP-Liberal Government.

The difficulty of achieving those opposite objectives is obvious. Necessary measures to increase public revenues will be a must. Those can only lead to voters being required to pay more to government in one way or another, be it increases in taxation or the price of other public services. Those are all unpopular with voters.


All that points to an early election before the budget. The question is, will the state of play in the UK-EU negotiations for a ‘deal’ for Gibraltar allow for an election to happen so early on? If a Gibexit ‘deal’ is announced before Easter, we will have another hint that an early election is on the cards.

Recent activity by the Gibraltar Social Democrats [GSD] points to that party believing that an early election is possible. The GSD seems to be moving onto more of an election footing.


The lesson to avoid imposing direct rule, if possible, was learnt by the UK Foreign Commonwealth and Development Office [FCDO] after it did so in the Turks and Caicos some years ago.

In the British Virgin Islands [BVI] the FCDO pursued the different policy of agreeing to a National Unity Government giving effect to prudent policies. Those were suggested in an Inquiry Report into corruption and maladministration. The FCDO took that road instead of taking up the Inquiry recommendation that direct rule should be imposed.

In the BVI the National Unity Government worked under the oversight of the FCDO to implement all the Inquiry recommendations and other FCDO requirements. The possibility of direct rule being imposed was left hanging in the air by a Privy Council Order that was made capable of immediate implementation if the National Unity Government did not do as agreed with the FCDO.


The BVI way forward was in essence ‘remote control government’ by the FCDO, but leaving a semblance of local democracy. One would hope that form of ‘remote control government’ is neither at work or will be put into effect in Gibraltar.

The state of public finances and overborrowing, with the UK guaranteeing the last £500 million tranche of borrowings, however can lead to much speculation on that front. Any Gibexit ‘deal’ and the forthcoming budget may be indicative of more.