Nick Clegg says Northern Ireland economy must diversify

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Deputy Prime Minister Nick Clegg has said the coalition government is not going to "pull the rug from the Northern Ireland economy".

However, he warned that the government was committed to dealing with the deficit.

Mr Clegg pledged to look again at the level of spending cuts proposed in Northern Ireland.

He was speaking after talks with the first and deputy first ministers on Thursday.

On Friday, Mr Clegg reassured Northern Ireland political leaders that he would look at the spending commitments given by the previous government in the St Andrews Agreement.

He was speaking after meeting students at Queen's University in Belfast on Friday.

Earlier on Friday, Mr Clegg told BBC's Good Morning Ulster that he was conscious that the NI economy was very dependent on the public sector.

"Over time we clearly need to try and create a NI economy which is more diverse in which you have more people employed in the private sector," he said.

"That's not something you can just wave a magic wand and do overnight.

"We're very aware of that and we're also aware that these are exactly the kind of things we need to consider when we make these decisions about how to deal with the deficit."

Mr Clegg said the alternative of not dealing with the deficit, would not be good for the Northern Ireland economy.

However, he said he was aware that Northern Ireland was a society still adjusting after years of violence.

Mr Clegg met with Peter Robinson and Martin McGuinness on Thursday but said he could not provide any assurances because decisions were still being made ahead of 20 October.

"The first minister and deputy first minister raised with me in very clear terms their concerns about the possible impact of the deficit reduction plan we are setting out on capital expenditure in Northern Ireland," he said.

"I have said that I will go away with colleagues in the coalition government to look at this."

"We understand their concerns, we'll look at them but obviously I can't provided detailed assurances now because everything is still being decided upon before October 20."

After the meeting, Mr Robinson said that "we once again reiterated our position that Northern Ireland faces a particular set of challenges which differ from the rest of the UK".

"The Coalition's proposed cuts will, I have no doubt, have a far greater effect here that any other region."

Mr McGuinness said: "In the course of our discussions, the first minister and I again reiterated our call for the British Government to fulfil their obligations under the St Andrews Agreement and we will continue to make that case through every avenue possible."

'Investment pledge'

Mr Clegg met Mr Robinson and Mr McGuinness hours after the Stormont Executive joined forces with the Welsh and Scottish administrations to warn the Treasury not to cut too much from their block grants too soon.

But Northern Ireland's political leaders have also put an additional argument to the coalition, claiming a cut to their capital budget would break an £18bn ten-year investment pledge made by the last Labour government as part of the peace negotiations.

The 2006 St Andrews Agreement, which paved the way for the DUP and Sinn Fein to share power, incorporated a joint deal between the British and Irish governments to fund infrastructure projects in the region.

While the Dublin authorities insist they remain committed to the multi-billion package, despite the country's severe economic woes, there has been no such undertaking from Downing Street, which has questioned whether Gordon Brown made a promise he couldn't keep.

Mr Clegg said the focus should not be on capital expenditure alone.

"There are a number of other things we do need to look at," he said.

"We need to see whether in the long run we can give greater autonomy to NI to change for instance, corporation tax rates."