Against a backdrop of potential default in Italy, and German Chancellor Angela Merkel calling on Europe to embrace political union, Malta’s budget focused on three major issues; reducing the deficit, helping those who are feeling the pinch and giving the government some leeway in the event of a Europe-wide financial catastrophe. We have called it a shock absorber.

The reality is hitting home. The EU, the rest of Europe and the developed world are at a very serious juncture, and Malta fits into that equation. This budget, while building on the last, seeks to provide a buffer to allow the government leeway to intervene if things do go belly up. Although Malta is doing relatively well in terms of deficit and debt, the European Commission is not going to allow any deviance in terms of reining in deficits, or in Malta’s case, exceeding the 3% Maastricht limit.

Malta’s debt is still at 69% of GDP. If that is to be reduced, then people need to finally understand that the deficit must be turned into a surplus – it really is that simple. This budget has a long-term aim of turning that deficit into a surplus, so as to reduce the sovereign debt, but at the same time contend with the fact that Malta’s economic growth is projected to contract to about 2.3% next year.

The real crux of the matter is that if the deficit is not dealt with in a preemptive manner, then the government will simply not be able to intervene if things turn out to be as bad as some are projecting.

In order to stave off the inevitable slowdown, the government has also announced some capital projects, which should at least get the gears of the economy going, and will put some money back into the kitty, as well as creating jobs, which is crucial.

There were a number of measures announced in the budget which are specifically designed to facilitate liquidity, in terms of schemes and loans for smaller enterprises which employ up to 20 people. This is being done to safeguard against any potential drying up of cash on the European market, once again if the crisis turns out to be a full-blown catastrophe.

The key words are caution, that horrible word prudence, responsibility and job creation. The days of people being glued to the screen to watch for the one mil increase in corned beef prices are long over. These are the last days prior to what could be the greatest recession the world has ever seen and just like any other catastrophe, we can only prepare ourselves as best as we can. This is what this budget has tried to do.

It is no longer a case of trying to improve our lot and increase our ‘quality of life’ but more a case of trying to preserve the life that we now enjoy. This budget is one for the long-term future, although it does offer some quick fixes. At the same time, however, the days of a budget being a one-year plan have also disappeared. The key to surviving in today’s cut-throat world is adaptability. Turning that deficit into a surplus is the only way that this government, or any subsequent government, can deal with the potential fallout which will ensue if this really is going to turn out to be worse than the Great Recession of the 1930s. This budget allocates €2bn to try and make these little islands watertight. The only way to do that is to continue down the road of fiscal discipline and consolidation. We will only continue to attract investment if we prove we can withstand the oncoming onslaught. We have to continue to be seen as a safe bet.