Northern Ireland awaits Spending Review details

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George Osborne
Image caption,
George Osborne is due to make his announcement at 1230 BST

Northern Ireland is waiting to find out how the Chancellor George Osborne's Spending Review will affect public spending here.

The Chancellor promised to be guided by "fairness" as he unveiled the biggest budget cuts in decades.

He stressed that funding counter-terrorism against the threat in NI was a government priority.

It's anticipated that NI could lose £2bn of its block grant when the impact of the proposals is established.

The Department of Finance at Stormont will work out how the cuts will breakdown later.

A £200m rescue package has been announced for the Prebyterian Mutual Society, made up of £25m in cash and a £175m loan.

The amount of money the Executive has to spend from the Treasury is called the block grant and is currently about £10bn a year.

The calculation is worked out on the basis of the Barnett formula - the same mathematical system, linked to population, which governs all the devolved regions

This is expected to be cut by about £2bn over the next four years - leading to what many commentators say will be significant economic hardship.

The cuts to the block grant do not include the impact of any welfare cuts - which are strongly predicted.

These will mean additional cutbacks - prompting welfare groups to claim that poorer families could suffer the most.


One inevitable consequence of the squeeze on government spending will be job loses not just in the public sector but across the wider economy.

Chief Economist for Ulster Bank Northern Ireland, Richard Ramsey, said the review will provide more detail as to how and where these cuts will take place but how they are implemented will be at the discretion of the executive.

"We are once again awaiting the details of yet another budget, a Northern Ireland one, possibly in January."

Mr Ramsey said there are also other budget and public expenditure announcements of particular relevance to Northern Ireland.

"Northern Ireland is more exposed to developments in the Republic of Ireland than any other UK region.

"Next month the Irish government will reveal its four-year fiscal plan and this will be followed by a budget on 7 December," he said.

"Both of these plans will reveal the scale of the fiscal pain facing our nearest neighbour and in turn, these plans will help Northern Ireland manage expectations as to the cold economic wind that will be blowing from the south as well as the east."

This week, Mr Wilson said politicians in the Executive cannot delay agreeing a budget for Northern Ireland once the announcement is made.

Public Sector

A fresh assembly election is due in May and under the Stormont system the local parties may very well inherit different departments from the ones they currently occupy.

BBC NI Political Editor Mark Devenport said cuts to be brought in through the Spending Review could cause a turf war among the parties of the Northern Ireland Executive.

Of all the regions in the UK, Northern Ireland depends most on state spending - about a third of its workforce is employed by the public sector.

Moreover many private companies, like the construction firms currently working on a number of major projects in Belfast's Titanic Quarter, rely on public sector contracts.

Some observers wonder whether, once the Spending Review is announced, the local parties will be able to agree a budget.

If they are unable to they might choose instead to keep the Stormont finances ticking over on a more temporary basis.