Belfast Telegraph

Stormont departments 'set for small cash boost in Chancellor's Budget'

By Margaret Canning

Government departments here are here are likely to receive a small increase in funding from today's Westminster Budget, it has been claimed.

Chancellor Philip Hammond today presents his first Budget to the House of Commons, with measures including a new T-level qualification in technical skills.

Ulster University economist Dr Esmond Birnie said Mr Hammond would do so with a positive message on growth, despite earlier fears over Brexit.

"Last year the UK economy's GDP grew by just over 2% - by international standards a creditable performance - and there was certainly no sign of any immediate negative shock from Brexit," he added.

"Most forecasters are now indicating a figure of about 1.5% for this year.

"Today, the Chancellor will have the benefit of being able to say that the independent Office for Budget Responsibility has revised upwards its forecast for economic growth."

Dr Birnie predicted a "small loosening of the fiscal strings" over the next two years, which would trickle down to Northern Ireland as a result of the Barnett formula for government spending in the regions.

"From a Northern Ireland view, that will probably imply a slight (it could be well under 1% of annual spend) increase in the funding for departments - a small and positive Barnett consequential," he said.

Corporation tax will be covered in the Budget, and Dr Birnie said the Chancellor could make reference to Northern Ireland's plan for a 12.5% level.

But he added the fiasco of the misspending of public money under the Renewable Heat Incentive (RHI), and the lack of an agreed Budget for the region, could mean preconditions of fiscal sustainability would not be met.

"Chancellor Hammond may choose to point out how Northern Ireland needs to get its house in order before it can have corporation tax power," Dr Birnie explained.

"However, he will probably be too diplomatic to read the riot act to the Northern Ireland politicians.

"At the same time, the planned progress to a UK rate of 17% in 2020 could be accelerated. The RHI fiasco demonstrated how a well-intentioned policy could have adverse public spending consequences, and RHI was probably a much less complex policy than corporation tax."

He also said that despite higher-than-expected GDP growth in the UK, the economy in Northern Ireland was suffering from "deep, structural flaws" even though the vote to leave the EU had not led to an immediate recession.

"Comparative living standards and comparative productivity have been declining since around 2007; the gap compared to the UK average has widened rather than being closed," Mr Birnie added.

Last year, the Chancellor announced plans to discard the convention of two Budget announcements a year. Instead, from next year, the main Budget will be delivered in the autumn.

Belfast Telegraph