Northern Ireland’s proposed “fantasy budget”, which won cross party support on Wednesday in Stormont, will buy the Executive “a little breathing space” but it has not solved all of their financial challenges, business leaders have warned.

The second stage of Finance Minister Arlene Foster's first budget received support from the Democratic Unionist Party, Sinn Féin and the Alliance Party while the Social Democratic and Labour Party and the Ulster Unionist Party did not vote.

The Green Party's Steven Agnew, Independent Unionist John McCallister and Jim Allister from the Traditional Unionist Voice voted against the budget bill in the Assembly.

The budget which has been hailed by some as a fantasy budget because it pretends that the ongoing row over welfare reforms has been resolved - in essence this budget papers over a £600 million hole in the Executive’s finances.

Nigel Smyth, the Northern Ireland director of the Confederation of British Industry said while Wenesday’s vote bought the Executive more time to sort out outstanding issues the local business community essentially wanted politicians to “live within their means and discharge government responsibly”.

Mr Smyth added: “The delivery of a sustainable and balanced budget is a critical element of the Stormont House Agreement and we would again urge all Executive parties to refocus on its complete delivery.

“This renewed focus on delivering the Stormont House Agreement must also include a laser-like focus on creating the tens of thousands of new jobs that will help transform our economic prospects and the opportunities available for our young people, and raise living standards.”

He said the business community would view it as “unforgivable” if the North’s political leaders failed to secure the “potentially transformative powers of a lower rate of corporation tax”.

A new economic study on Wednesday has highlighted that the North is set to face a “tough period of austerity” .

The latest latest EY Economic Eye Summer forecast suggests that the rate of growth in Northern Ireland will increase this year from 1.7 per cent to 2 per cent . But Graeme Harrison, economic advisor, said the North's economy also faces significant risks from the "forthcoming austerity ramp up in the UK, the strength of sterling versus the euro and changes in European Union State Aid rules".

Industry leaders throughout the North have urged the Executive to get its “finances on a sustainable footing” or risk damaging both investor and business confidence.

Paul Terrington, chairman of the Institute of Directors, said the current row over welfare reform was preventing a decision on the date and rate for the devolution of corporation tax.

Mr Terrington said: “The Finance Minister has brought forward a budget that assumes the full implementation of the Stormont House Agreement.

“That may be procedural device but it sidesteps an immediate financial crisis and buys a little time for the political parties to resolve the outstanding issues and to put the Executive finances on a sustainable footing.

The North’s construction sector is also anxious to see a resolution to current issues.

Marie Nawaz, director of the Federation of Master Builders said an agreement was needed to "secure the future of the construction industry in Northern Ireland".

“Without a consensus on welfare all other constituent parts of any future budget are in serious doubt. This includes the £700 million loan from the UK Treasury, used to fund the public sector voluntary exit scheme and the devolution of powers to decide on our own levels of corporation tax.

“If no deal on welfare is made, we can also expect another round of fines which will amount to £114 million,” Ms Nawaz warned.