North could face emergency budget, economist warns

POLITICAL LEADERS in the North may have no alternative but to follow the Republic and stage their own emergency budget if public expenditure levels get slashed in the UK budget later this month, according to Ulster Bank.

Richard Ramsey, Northern Ireland economist with Ulster Bank, claims there is little transparency regarding the current condition of the Executive’s public finances in the North.

“The latest multi-budget projections were contained in the Programme for Government which were presented at the start of last year. These are no longer realistic. How unrealistic they are remains unclear,” Mr Ramsey said.

He believed the scale of the deterioration in the North’s finances is nowhere near as severe as that in the Republic.

However, he added that sooner or later the North’s Executive would have to provide clarity on its fiscal position.

The Northern Ireland Executive is coming under increasing pressure to reconsider its 2009 budget as a result of deteriorating economic conditions in the North.

Spending proposals first announced in October 2007 suggested the North’s budget could total in the region of £10 billion over 2008-2009 and increase to nearly £11 billion by 2010-2011.

However the sharp downturn in the Northern Ireland economy has caused some to voice concerns that the budget projections may already be out of line with economic reality.

The SDLP recently tabled a motion in the Assembly calling for the “Executive to revise the priorities set out in the Executive Programme for Government and budget in light of the current economic crisis; and to direct further expenditure into social housing, retraining and upskilling”.

Mr Ramsey said there were now issues concerning the Executive’s spending capabilities and the public finances. “The most concerning known unknown is to what extent Northern Ireland’s capital investment plans, which were projected at the height of the property boom and were partially reliant on property/land sales, have been scaled back.”

He urged political leaders not to rush into scaling back existing capital investment plans in order to maintain construction jobs and activity in Northern Ireland. He said the real test for the Executive and public finances would come when the British chancellor delivered his budget on April 22nd.

The North’s Finance Minister Nigel Dodds has repeatedly defended the Executive’s response to the economic downturn.