Belfast Telegraph

Friday 11 July 2014

George Osborne's cuts 'could leave us £360m short'

Chancellor George Osborne during a visit to manufacturing company Sertec, in Birmingham, where he gave a speech on his outlook for the economy yesterday

Northern Ireland's public purse will be at least £360m worse off if the Chancellor pushes ahead with plans to slash spending again.

That's the view of economist John Simpson who said the figure is our quota of the £25bn George Osborne has proposed cutting annually from the UK budget, around £12bn of which will come from welfare.

And with a higher percentage of people claiming benefits than any other region of the UK, Northern Ireland is expected to be hit hardest if Mr Osborne's planned cuts are implemented. But news that further austerity looks to be on the cards shouldn't come as a surprise as the Chancellor and others had already hinted that further cuts were needed to balance the country's books.

That's particularly true given the still-fragile state of the economy and Mr Osborne's actions have been applauded.

"What the Chancellor said is right," Professor Neil Gibson, Director of the NI Centre for Economic Policy and Professor of Economic Policy said. "He's got to remind people that Government is committed to get the deficit down by cutting spending, something which will have implications for us."

"We're still looking at more for less in the public sector, so all of Finance Minister Simon Hamilton's work will remain relative."

But Professor Gibson said the Northern Ireland Executive should view Mr Osborne's proposed additional spending cuts as a shot across the bows.

A failure by Stormont to agree on how to implement welfare reforms late last year means Northern Ireland is facing a £200m-a-year bill from Westminster.

He said the Executive is right to question how such cuts will impact Northern Ireland, but needs to quickly come up with an alternative solution to save money. Despite the austerity, Professor Gibson said there may be some sweeteners from the Chancellor further down the line given the approach of the General Election.

He said: "He's preaching a hard message so that any little bonuses that are given out later are well received."

And as far as the economy here is concerned, economist Richard Ramsey at Ulster Bank said more evidence is needed to back up recent positive economic indicators.

"It remains to be seen whether this is just a clearing as opposed to the economy being out of the woods or if we're on the path to the much-vaunted sunny uplands of renewed prosperity," he said.

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