Belfast Telegraph

Private sector must be boosted

Editor's Viewpoint

Even after Finance Minister Simon Hamilton's statement to the Assembly, the draft budget remains a fiendishly complicated document with mind-boggling sums of money being juggled about in an attempt to meet the unprecedented financial challenges facing the Stormont administration.

What the document does is buy ministers time while they work out how, and where, the cuts to their budgets will fall.

Of course, those in charges of Health and Enterprise, Trade and Investment will have a different challenge - how to spend the extra funding they are to receive. The draft document also contains a big assumption, that the impasse over welfare reform - which has the potential to cost Stormont many millions of pounds in fines from the Treasury - will be resolved. There is no allowance made for those fines. What is clear is that many services will be cut - some may be axed - and thousands of public sector jobs will also be shed. For the future, as outlined to MLAs yesterday, is bleak indeed.

By 2019 an additional 13% - some £1.3bn - will be cut from budgets, making the next 12 months look like days of wine and roses. There are bound to be tensions as the full details of this round of austerity become clearer. One simple narrative that may well be peddled in the coming months is that public sector workers are being sacrificed to line the pockets of company directors.

This follows the announcement that money has been set aside for the implementation of corporation tax varying powers. To link the two measures in this way would be simple mischief-making. Lowering the rate of corporation tax has been suggested as a proven incentive to lure new inward investors.

It worked for the economy in the Republic and it stands or falls on its own merits.

As well as attracting new investment, a lower rate could encourage existing companies to expand. Such developments are required to rebalance our economy. Not everyone is a fan of lowering corporation tax and there is a risk of reduced revenues if new businesses are not established. It is not a silver bullet carrying a guarantee of success, but its critics have been remarkably slow in suggesting any other measure which could be regarded as a game changer.

And we desperately need a revitalised private sector to offset the impending carnage in the public sector.

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