Bermuda's economy will not improve this year according to the Chamber of Commerce who believes Government should have cut costs instead of increasing the Budget.

In a hard hitting statement released late yesterday evening the Chamber's Executive Vice President, Diane Gordon, said members had "expressed broad concern" over the national Budget and lack of "fiscal discipline" in the public sector.

Mrs. Gordon said members felt the Budget would result in people loosing their jobs and the cost of imports rising. She added that the Chamber was concerned that little focus appeared to be put on education, which saw its budget cut 5.9 percent, while Government had decided to go ahead with non-essential expenditure such as $400,000 allocated for the municipalities review.

The Budget came in this year at $1.2 billion with the Ministry of Transport and Tourism receiving a ten percent increase and Ministry of Labour and Home affairs receiving a four percent increase; the Ministry of Finance received a 55 percent increase, which will be partly used to pay interest on debt and make a contribution to the sinking fund.

Last night Mrs. Gordon said: "The Bermuda Economy continues to deteriorate therefore it is a concern that fiscal discipline in the public sector is missing whilst the private sector is burdened with increased payroll tax. The outcome is likely to result in job losses in an already tough private sector and increased outsourcing."

And she said the Chamber was not as optimistic as Finance Minister Paula Cox says, who predicted the Gross Domestic Product would increase this year.

"We believe GDP will remain neutral at best for the next twelve months," she said. "There are currently no signs of economic improvement based on feedback from our membership."

Mrs. Gordon said the Budget has placed "undue burdens" on the private sector during a period of financial duress. And she said it was disappointing the Government had not implemented a hiring freeze in the civil service.

"We are equally concerned that no mention is made of focusing expenditure on key strategic objectives connected with social expenditure and education whilst postponing non critical expenditure on capital projects and initiatives such as the Municipalities review," she added.

Mrs. Gordon said the public would also be hurt by the increase in foreign currency purchase tax, which will translate into increased cost for all imports.

"These costs will be passed on to the consumer," she said. The one section the Chamber praised in the Budget was that announcement that companies will be able to acquire units of hotel development properties. "International Business is the cornerstone of the Bermuda Economy and every effort should be made to consolidate and nurture this sector," she said. "Consequently, the removal of term limits would be the equivalent of a 'stimulus-package' to our economy."

Mrs. Gordon ended her statement by saying: "The Chamber of Commerce appreciates that the Bermuda economy is in uncharted waters but holds the belief that the burden of reducing debt, achieving cost savings and targeting areas of stimulus and relief should be shared equally by the public and private sectors. "Growing Government expenditure, unprecedented growth in national debt during a period of severe economic weakness is not a path for a sustainable future."