A Stormont spending watchdog has warned that the devolved Executive faces a “cliff edge” when money from a Government support package runs out.
The Northern Ireland Fiscal Council said the £3.3 billion settlement provided a substantial cash injection to deal with immediate pressures facing public services in the region.
But it questioned whether the package offered a realistic route to long-term financial sustainability at Stormont.
The fiscal council, which is an independent body that scrutinises how public money is spent in Northern Ireland, has conducted an assessment of the Treasury-funded settlement.
It highlighted that the package included almost £850 million to help the devolved Executive balance its budget this year, including meeting the cost of outstanding public sector pay settlements.
The council said more than £750 million would be provided in both 2024/25 and 2025/26 before there was a sharp drop-off to £320 million in 2026/27.
The watchdog speculated that the “cliff edge” in support was presumably designed to encourage locally elected ministers to take “decisive action” on revenue raising, budget savings and public service reforms.
But it said there was “no immediate evidence” of Stormont ministers taking those steps.
The Treasury has offered to write off almost £600 million of Stormont debt as part of the package.
But this was conditional on the Executive raising £113 million of additional revenue this year and producing a plan to deliver sustainable finances.
The settlement also includes reform of the Barnett formula for allocating Treasury funds to Northern Ireland, with funding rates for the region set at 24% above comparative rates in England.
The Government has said this will reflect the “different levels of need in Northern Ireland”.
The fiscal council said this change to the Barnett formula was the most significant longer-term feature of the settlement.
But it said it remained unclear how the new 24% mechanism would operate.
Offering an assessment of the overall package, council chairman Sir Robert Chote said: “The funding package should balance the Executive’s budget this year, provide significant support over the next two years and arrest the ‘Barnett squeeze’ over the longer-term.
“But if the deal is to deliver sustainability, the Executive will need to take and implement tough decisions on revenue, spending and public service reform and some may question whether this is realistic to expect in the time available.”