Budget necessary and unavoidable: Simpson
Recovery in the Northern Ireland economy will not be easy following Tuesday's emergency Budget, economist John Simpson has warned.
"But if we had anything less radical I suspect it would be worse," the veteran commentator said yesterday.
"On this occasion I think the Conservatives and Liberal Democrats have got it right. The emergency Budget was both necessary and unavoidable."
Mr Simpson told 110 delegates attending a post Budget breakfast that faced with a mounting debt crisis, the Chancellor George Osborne had no option but to take the drastic measures he did in the wake of the banking crisis, collapse of the property market, recession and a decrease in tax revenues. "Once all this was acknowledged there was no going back," the economist added.
Key figures the top economist highlighted included:
- Public sector net borrowing (PSNB) stands at 11.1% of GDP (£156bn), which Mr Simpson described as "too bloody high";
- PSNB earmarked to fall to 1.1% (£71bn) by 2015/16;
- Public sector net deficit (PSND) is 53.5% (£772bn);
- PSND forecast to rise to 67% by 2015/16 (£1376bn);
- Government debt interest pre-budget is £42.1bn;
- Government debt interest will rise to £67.2bn by 2014/15.
The event in the Holiday Inn on Belfast's Ormeau Avenue was hosted by Goldblatt McGuigan and the Belfast Telegraph and was attended by representatives from the private, public and voluntary sectors.
Commenting on calls for a 'special case' for Northern Ireland on the grounds of recovery, it is a deprived region and has lower incomes/prosperity, Mr Simpson pointed out that the Northern Ireland fiscal deficit (when government expenditure exceeds revenue) was £7.3bn (26% GVA), public expenditure was 22% higher than the UK average and the province has lower costs in terms of rates, water and housing than many other UK regions.
"The special case argument is not going anywhere at a political level," he claimed.
The economist also highlighted the problem of the disparity in earnings between the public and private sector in Northern Ireland.
Figures show the public sector here has average earnings of £535 per week compared to £383 for the private sector - a 40% difference and much higher than the UK average of £539 for the public sector and £465 for the private sector - a difference of just 16%.
"The best that can be said of the emergency Budget is that economic recovery will be slow, slightly slower than if things were left alone. Every family in the UK will be hit to some extent but something like that had to happen."
Sir David Fell, former head of the civil service and chairman of Goldblatt McGuigan added: "In my view when a new Government has a painful Budget early on, it does that so the electorate forgets that pain over time.
"I believe we have had most of the pain and we probably got the worst over yesterday."