STORMONT will receive just an extra £4.2 million for everyday public spending from Wednesday’s Budget, Finance Minister Conor Murphy has said.
The Sinn Féin minister said while the extension to the furlough scheme to the end of September and the extra support for self-employed were welcome measures, virtually all the £411.9m announced for the north by Chancellor Rishi Sunak fell under Covid-19 response funding.
“Almost all of this money is one-off funding for the Covid response which is welcome as we look to the recovery phase, however, it still leaves us with a flat-cash budget for mainstream public services,” said Mr Murphy.
“It is also disappointing that there is no extra capital money to spur economic recovery.
“An investment-led approach is absolutely critical given we have never fully emerged from years of austerity measures.”
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The Finance Minister’s comments came as the Office for Budget Responsibility (OBR) predicted the UK economy as a whole will recover to pre-crisis level by the middle of 2022 - six months earlier than previously expected - thanks to a "swifter and more sustained recovery".
The fiscal watchdog is also predicting that unemployment will be lower than expected, but the OBR is still forecasting the UK economy will be three pre cent smaller in five years due to the crisis than it would have been.
The recovery is likely to be more stunted in Northern Ireland, with the region traditionally lagging below UK performance averages.
A report produced by the Department for the Economy last week said the north’s economy contracted by 11 per cent in 2020, and may only grow by 4 per cent this year.
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While upping the outlook for next year, the OBR also slashed its GDP forecast for every other year until 2025, including a cut for this year to 4 per cent from the 5.5 per cent growth it previously pencilled in.
The independent forecaster also laid bare the toll on the UK public finances from more than £400 billion of Covid-19 support to businesses and households.
It is predicting UK Government borrowing will soar to £355bn in 2020/21 - lower than the £394bn first forecast but still 17 per cent of national income and the highest level since the Second World War.
Borrowing will remain at eye-watering levels in 2021/22 at £234bn, up from the £164.2bn pencilled in before and 10.3 per cent of GDP, but will fall gradually to 2.8 per cent in 2025/25.
Rishi Sunak said: "The amount we've borrowed is only comparable with the amount we borrowed during the two world wars. It is going to be the work of many governments, over many decades, to pay it back."
The OBR cautioned the GDP outlook could be worse than outlined in its central forecast if the vaccination programme suffers setbacks or if there are further lockdowns.
Its forecasts also reveal a hit to GDP of 0.5 per cent from Brexit disruption in the first quarter, with export of UK goods and supply chains impacted by border delays.
