Belfast Telegraph

Province's debt pile soars after £2.6bn loss

By Clare Weir

Northern Ireland's public purse has fallen further into debt.

Latest figures show the region's balance sheet lost £2.6bn between 2004 and 2009 - meaning a debt of £5,052 per person.

In 2008-2009, the net fiscal balance for the public sector in Northern Ireland - the difference between what we earn and what we spend - was a deficit of £9bn, a whopping 31% of Gross Added Value (a measure of output). This is significantly higher than the UK equivalent of 8.7% and two-and-a-half times that of crisis-hit Greece at 13%.

Analysts have warned that the gap is set to have widened since then as the figures were collated just as the recession began to bite.

The data was released in the Northern Ireland Net Fiscal Balance Report, which focuses on the expenditure and revenue generated within the region.

Total public sector revenue collected in Northern Ireland was estimated to be £12.8bn in 2008-09, 2.5% of the equivalent UK total.

Total public sector expenditure is estimated to be £20.8bn, 3.5% of the equivalent UK total.

The 'fiscal deficit' in Northern Ireland was equivalent to a staggering £5,052 per head, which compares to a per head figure of £1,785 in the UK.

Also worrying is a collapse in revenue from stamp duty, which ties in with the collapse of the housing market.

Like other figures, the Northern Ireland deficit was much larger than that in the rest of the UK.

Between 2007/2008 and 2008/2009, stamp duty revenues declined by 58.3% in Northern Ireland compared to 43.3% in the UK.

Richard Ramsey, chief economist with Ulster Bank, said that the figures show that Northern Ireland suffers from "fiscal deficit attention disorder" and predicted that the figures could get worse." I think it is a positive step that this report provides further transparency on Northern Ireland's fiscal position," he said.

"[It is] communicating this reality to the electorate of what the fiscal facts actually are and what hard choices the Assembly needs to make.

"Northern Ireland suffers from 'FDAD' - fiscal deficit attention disorder.

"This is a condition whereby a lack of appreciation of public finances has fuelled unrealistic expectations of what can be afforded and how far revenues can be stretched.

"This report and the figures it contains provides much needed transparency regarding the cost of running Northern Ireland Plc."

Esmond Birney, economist at PwC in Belfast said: "I am not surprised at these figures. The impact of the downturn and the slow recovery will help to make debt transfer even bigger.

"The revenue being raised in taxation has also been very disappointing and is one feature which highlights the agenda of the Treasury in London in trying to rebalance the Northern Ireland economy and seek more competitiveness in both the public and private sectors."

Belfast Telegraph