Treasury Minister Dr Alex Allinson is due to present his second annual Budget today – against a financial backdrop he’s described as one of the most challenging the island has faced.

Tynwald members have already been warned that difficult decisions are needed to balance the books.

‘This year has probably been one of the most challenging we’ve faced,’ said Dr Allinson.

The island’s public finances are still recovering from the impact of Covid and have taken a further battering from inflationary pressures and higher costs, including significant pay awards for frontline workers.

But with household incomes squeezed by the cost of living crisis, any moves to place a further financial burden on residents will never prove popular.

However, the Treasury Minister may have little alternative.

The island is running a structural deficit this year of more than £125m.

Tynwald will be asked this week to approve an extra £46.7m in supplementary votes to cover department overspends.

It’s come as no surprise that the health service is once again in the red but the scale of its overspend – £30m – is unprecedented.

In his Budget speech last year, Dr Allinson said there was no choice but to draw down heavily from reserves if cuts to services were to be avoided and the gap between income and expenditure bridged.

But he has said that we cannot keep plundering from reserves.

He told the Isle of Man Examiner: ‘We’ve already been quite open in terms of department spending and the extra pressure various departments have faced in terms of pay increases and general inflation particularly in the healthcare sector.

‘Treasury is working with departments looking at how these pressures can be mitigated.