The excess of £300 million (€343m) will be the first charge on any new monies. With no government in place in Stormont, last year saw an unplanned deficit. The pain for the North does not end there. The planned reduction of 0.4 per cent in discretionary expenditure is both a real and a nominal cut. For Northern Ireland the situation is even bleaker. Given the very high rate of inflation this is a big cut in real terms. The UK’s budget in March provided for an increase of only 1 per cent this year in government expenditure. Although higher taxes could avoid the need for cuts to public spending that approach is anathema to the Conservative government. This means that British government has very limited resources available for public services, and the funding it provides to the regional administrations in Scotland, Wales and Northern Ireland is being squeezed. Last year UK government borrowing amounted to 5.5 per cent of national income: in contrast the Republic of Ireland recorded a surplus of 3 per cent. The North’s problem partly reflects the economic difficulties that the wider UK is facing. While the Government in the Republic finds itself in an extremely strong financial position right now Northern Ireland faces a very difficult budgetary situation over the coming year.
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