INDUSTRY REACTION:DEEP CUTS, fewer welfare benefits and a higher retirement age are all measures designed to help Britain step "back from the brink", according to the UK chancellor.
But will these strong-arm tactics push Northern Ireland toward one? Perhaps not a brink but most definitely a “watershed”, said one industry chief.
George Osborne outlined plans for Northern Ireland’s budget to rise to £9.5 billion in 2014/15 in his spending review but the day-to-day reality of it means the North’s Executive will have to save or find between £1.2 billion and £1.4 billion over the next four years.
According to forecasts from business advisers PwC, the Executive could be looking at an 8 per cent spending cut over the next four years, with departmental spending down by about £830 million. In addition the Executive’s capital spending budget could be reduced by a further £560 million over the same period.
Esmond Birnie, PwC’s Northern Ireland chief economist, claims this might not even be the worst-case scenario. “We believe the Executive may have to find up to an additional £300 million a year to meet unfunded commitments.”
Richard Ramsey, Ulster Bank’s chief economist in the North, says the real “sting in the tail” for the local economy could be the proposed 40 per cent cut in capital investment over the next four years. “This provides our local construction sector with a very bleak future and pretty much copper-fastens a further surge in job losses, running into several thousands, in the coming years,” he added.
The overall net result of the review, according to Francis Martin, the president of Northern Ireland’s largest business body, could be 30,000 jobs in the long run. The president of the Northern Ireland Chamber of Commerce said the North had been “structurally reliant” on the public sector for decades. But this reliance could prove to be one of its overwhelming weak spots as the UK government takes action to “confront the bills from a decade of debt”.
In Northern Ireland, more than 30 per cent of the workforce is employed directly by the government.
Initiatives to reduce public expenditure over the coming years will inevitably lead to job losses. But the fact that George Osborne also intends to tackle what he described as “the fundamental drivers of welfare dependency” could be the litmus test for Northern Ireland.
The chancellor has unveiled £7 billion in additional welfare cuts for the UK. In Northern Ireland this will have a major impact for anyone who receives incapacity benefits or disability living allowances, household welfare benefits and working tax credits.
According to the assistant general secretary of the Irish Congress of Trade Unions Peter Bunting, any cuts in benefits will “proportionally hit more people in Northern Ireland”. He warns that people across the North cannot escape the impact of the cuts and it will hit everyone from small shopkeepers to teachers, from accountants to nurses.
