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Ulster facing ‘double whammy’ of spending cuts

Published 28/09/2009

Northern Ireland’s economy could be faced with a potential double whammy of spending cuts, a leading economist has warned.

Northern Bank chief economist Angela McGowan said any possibility of spending on the UK welfare system could be cut by Westminster, meaning Northern Ireland would be one of the hardest hit regions on top of any other cuts stemming from a shortfall in Northern Ireland's block grant.

Currently any changes to the UK welfare system apply to all regions of the nation because of the parity principle.

It ensures equality in areas such as social security benefits, housing benefits, working tax credits, child tax credit and disability allowance.

Ms McGowan said recent Government statistics showed Northern Ireland — along with North East and West England and Wales — has the highest percentage of families receiving benefits compared to the UK average. So any cuts would be felt more acutely in those areas. “The Northern Ireland economy has traditionally been highly dependent on Government benefits. The NI Social Security Agency distributed approximately £1.9 billion in non-contributory benefits in 2008-09 and a further £482 million of housing benefits is currently distributed through the Northern Ireland Housing Executive,” she said.

“The role of welfare payments as a source of local household income should not be under-estimated.”

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