The large public sector which has cushioned Northern Ireland from the worst effects of the recession may also hinder recovery, First Minister Peter Robinson has warned.

The province had weathered the recession but the next challenge would be to weather the reductions in public expenditure that would be associated with recovery, he told the Institute of Bankers annual dinner in Belfast.

A day after Shadow Chancellor George Osborne spelled out the economic realities facing the UK, Mr Robinson delivered a dose of reality on the local stage.

He said: "Our over-reliance on the public sector in Northern Ireland means that we could have significant challenges ahead as UK public expenditure cuts come after the next general election.

"This will be a reality whatever the outcome of the election and we must be prepared for it."

Mr Robinson added: "As we move forward it is clear that cuts in public expenditure will not be a choice but will be an inevitability - though I'm not convinced all my ministerial colleagues have yet faced up to that reality.

"You can be absolutely sure that the UK government will - after the election - take the thorny decisions and unless the Executive is also prepared to make such choices Northern Ireland will fall behind in terms of service delivery to the public. That is not a position I am prepared to countenance."

The DUP leader has already outlined party proposals for a radical cut in the size of the political machine at Stormont including a reduction in departments.

In his address he said: "In today's environment I believe what was once necessary is now unavoidable and inevitable."

But given the size of cuts that were likely to face Northern Ireland, politicians must be prepared to look more fundamentally at the size and shape of the public sector in the years ahead, he said.

And he warned if the public sector failed to bring about the necessary change internally he would have no hesitation in bringing in people from the private sector or from outside Northern Ireland to deliver it.

The First Minister said: "Politicians often underestimate the public's willingness to do the right thing when it is clear what the right thing is and what its benefits are.

"It is unrealistic and undesirable to expect the public sector to be run like a business but it cannot be immune from reform. And this reform cannot merely be cosmetic. It must be real structural reform."