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Chancellor's extra £920m for us simply not enough in face of Covid and Brexit: Murphy

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Chancellor Rishi Sunak

Chancellor Rishi Sunak

PA

Chancellor Rishi Sunak

The Chancellor's spending review promise of an extra £920m for Northern Ireland is not enough to cope with the challenges of Covid-19 and Brexit, Stormont's Finance Minister has said.

Conor Murphy insisted the outcome was disappointing in the context of the "huge challenges" we face.

Rishi Sunak's review brought an additional £920m for the Executive for next year, while he also said we would get a share in over £100bn of capital investment across the UK in 2021/22.

But he warned of "long-term scarring" to the UK economy from the pandemic.

The Chancellor said the UK would borrow £394bn this year - a record for peacetime - while the economy would shrink by 11.3%.

And he warned that even by 2025 the economy would still be 3% smaller than it had been before the global health crisis.

But Mr Murphy said the review did not offer enough.

"The Executive's budget for everyday spending on public services stands still while capital investment needed to kick-start an economic recovery only increases marginally," he added.

The Department of Finance said that of the £920m additional funding, £538m had been allocated for Covid relief and the remainder for core departmental spending.

It said that core spending for 2021/22 would be £11.6bn, the exact same as the year before.

For capital, there would be £1.6bn, compared to £1.5bn the year before.

Ann McGregor, chief of the Northern Ireland Chamber, said the additional money was "extremely welcome".

"However, with an uncertain winter ahead, the Government will need to maintain an open mind on providing further support to businesses struggling to survive," she said.

"Also, as we look to the future, businesses will need further significant incentives for investment in their people and productivity to ensure that they are well placed to recover and grasp any new opportunities as they occur."

Mr Murphy said public sector pay freezes for all except NHS workers and the lowest-paid people were "disappointing".

He added that the announcement "does not deliver the funding we need to support the health service, public services, vulnerable people, businesses and workers".

Ulster Bank chief economist Richard Ramsey said that despite the gains, total departmental spending will fall marginally year on year.

"This is due to a series of one-off payments boosting Stormont's budget in recent years," he explained.

"While Stormont has been spending unprecedented amounts of public money during the pandemic, budgetary pressures on the horizon loom large.

"Northern Ireland, like other parts of the UK, doesn't have multi-year spending plans beyond the next financial year.

"There may be light at the end of the tunnel regarding the health emergency, but the economic emergency has only just begun.

"The third emergency, the fiscal one, will be tackled last. We will hear more about that in forthcoming Budgets, but more taxation is a given."

Mr Sunak said the Government will also increase the National Living Wage by 2.2% to £8.91 an hour.

Nurses, doctors and others in the NHS will get a pay rise, but for the rest of the public sector any increase will be paused, affecting firefighters, teachers, the armed forces, police, civil servants, council and Government agency staff. However, the 2.1m public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250 next year.

He added unemployment is predicted to rise to a peak of 7.5% - or 2.6m people - in the second quarter of next year.

The DUP welcomed the cash injection, but Lagan Valley MP Sir Jeffrey Donaldson urged the Chancellor to widen public sector pay increases to include other key workers.

"We consider (deserving) our council staff who ensured the streets were clean and bins collected; our armed forces who helped get PPE and testing to where it was needed; the police officers who still tackled crime, and those who kept our public transport rolling," he said.

"I have urged the Chancellor to consider all those public sector workers who stood tall and carried on when there was no sign of a vaccine and no sign of lockdown being lifted."

The Chancellor said Northern Ireland's extra £920m was "new funding" which was more than double the £400m provided in the 2019 spending round. He added the funding was to "help Northern Ireland fight coronavirus and build back better".

The Treasury said the money is additional to £2.8bn extra guaranteed to the Executive this year as it faces coronavirus and its impact on the economy.

Mr Sunak said the impact of Covid-19 would be long-term.

"Even with growth returning, our economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022, and the economic damage is likely to be lasting. Long-term scarring means, in 2025, the economy will be around 3% smaller than expected in the March Budget," he added.

Belfast Telegraph


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