THE Chief Minister said that the Island would "rise to the challenges ahead" at the start of January.

Tony Brown MHK said that the Island would go through a difficult period as it adjusts to its new circumstances.

He said it would benefit from economic recovery in the United Kingdom and further afield and said there were ways of replacing lost income.

The fiscal challenge facing the Island was sparked following the UK's ultimatum over the VAT revenue sharing deal – a move that would cut government income by a quarter over the next two years.

The Chief Minister said: "This sudden and unwelcome change has presented us with the greatest collective challenge of our recent history.

"Looking forward we face fundamental questions about the structure, role, and size of government, its spending priorities and its sources of income. These will be hard questions with hard answers."

He also confirmed that it was time to revisit the long-shelved review into the structure and scope of Government.