Belfast Telegraph

Expert in emergency Budget warning

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 HM 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 Chancellor George Osborne could be looking at tax increases or public spending cuts worth at least £24 billion 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 £156 billion deficit means even greater pressure to cut public spending in England and in the devolved regions.

"With swinging 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 £6.2 billion of public spending cuts as part of his plan to take "urgent action" to address the UK's £156 billion budget deficit, while last week he announced he was scrapping £2 billion of projects approved under Labour.

The immediate impact of the £6.2 billion of savings was a £128 million cut in the Executive's budget.