Hopes that Budget blow may be softened for Northern Ireland
This week's emergency budget will be the toughest in a generation, an economist in Northern Ireland has warned.
Last week, Westminster's new independent finance watchdog, the Office for Budget Responsibility (OBR), slashed the Treasury's pre-election economic growth forecasts and revised public borrowing estimates.
PriceWaterhouseCoopers' chief economist in Northern Ireland, Esmond Birnie, said the OBR forecasts suggest that the Chancellor could be looking at tax increases or public spending cuts, worth at least £24bn a year until the end of the current parliament in 2015.
“The OBR has cut growth forecasts and says that UK structural borrowing will be nearly £1bn more than Alistair Darling's forecast in the March Budget,” Mr Birnie said.
“Lower growth, higher borrowing and a £156bn deficit means even greater pressure to cut public spending in England and in the devolved regions.
“With swingeing public sector spending cuts on his Budget radar, the Chancellor must be careful with regions like Northern Ireland that are heavily reliant on public expenditure.”
He said he hoped Mr Osborne will soften the impact of spending cuts on Northern Ireland and the Executive, by offering tax breaks or incentives to encourage private sector growth and investment.
“Regardless of how the Chancellor treats the regions, this is going to be the toughest Budget in a generation,” he added.
Last month, the Chancellor announced £6.2bn of public spending cuts as part of his plan to take “urgent action” to address the UK's £156bn budget deficit, while last week he announced he was scrapping £2bn of projects approved under Labour.
The impact of the £6.2bn of savings was a £128m cut in the Executive's budget.
Before the election, the Conservatives pledged a 12-month public sector pay freeze for those earning more than £18,000, but tomorrow could also see reform of public-sector pensions, where the cost is set to triple to £9.4bn over the next five years.