Standard & Poor Report on the Isle of Man Financial Position

Standard & Poor have this week confirmed that the Isle of Man has maintained its "AAA" long term and A-1+ short term sovereign credit ratings.

Standard & Poor have stated that "despite ongoing policy challenges, we expect the Isle's government balance sheet to remain very strong, underpinned by net assets estimated at above 40% of GDP in 2010. The stable outlook reflects our expectation that the government's overall robust financial position should enable the Isle to weather the ongoing budgetary and economic pressures, while maintaining a high employment rate and overall economic stability."

The report went on to say:

"The UK Government decided to modify the VAT sharing agreement with the Isle of Man in November 2009, as it assessed the agreement to be overly generous to the Isle. The modification implies a reduction of VAT receipts for the Isle amounting to £50 million in 2010 and £100 million thereafter, or 5% of GDP in total. As a result we expect the strong general government surpluses of recent years to turn into deficits peaking at around 2% of GDP in 2011. Despite the significant decline in revenues that the measure entails, we expect that the authorities will make use of their fiscal flexibility, and that the Isle's budgetary sustainability will not be at risk."

3rd December 2009