Belfast Telegraph

Eyes on Osborne in country's bid to tackle budget

By Heather McGarrigle

Balancing Northern Ireland's finances will be one of the major challenges to be addressed in Wednesday's Budget, according to accountancy firm Pricewaterhouse Coopers (PwC).

Dealing with a cumulative £4bn public spending cut and rebalancing the country's fragile economy will be Northern Ireland's main concerns.

Chancellor George Osborne delivers his 2011 Budget on March 23 at around 12.30pm.

PwC's tax partner Martin Fleetwood says there has been much speculation about the province's business future.

"Since December, the Executive has been considering a draft Treasury consultation paper on reducing Corporation Tax and creating Enterprise Zones.

"So, even if it's not in the Budget speech, we should see this consultation emerge soon."

Mr Fleetwood believes George Osborne's announcement this week will be closely scrutinised in Northern Ireland.

"Local eyes will be watching to see if the Chancellor offers any flexibility to the Executive on borrowing and on additional capital expenditure."

It is thought unemployment will have an impact on economic growth in all areas of the UK over the next 12 months.

PwC's chief economist in Northern Ireland, Dr Esmond Birnie, said Northern Ireland has seen the highest increase in unemployment of the UK regions, with a year-on-year rise of 6.3%.

PwC forecasts that growth in Northern Ireland will not exceed 1%.

Dr Birnie said: "That means further tax increases in the Budget could have a disproportionate impact on economic growth and business confidence."

With the Office of National Statistics reporting a £3.7bn surplus in public borrowing due to increased tax revenues, there could be good news.

PwC also estimates the expected announcement of an increase in personal tax allowances could see 23m UK taxpayers saving an average of £200 a year.

A planned 1p increase in fuel duty, due in April, could be postponed in an effort to appease the UK's 33m motorists, who are already feeling the pinch of soaring petrol and diesel prices.