Business

While other regions contribute to UK coffers, Northern Ireland costs it £5,440 per head

While some regions contribute more than £4,000 per head to the UK coffers, Northern Ireland has a deficit of £5,440
Gary McDonald Business Editor

NORTHERN Ireland's cost to the British Exchequer rose to £10.3 billion last year - and is likely to increase even further.

While London and regions like the south east of England contribute more than £4,000 per head to the UK coffers, Northern Ireland has net fiscal deficit of £5,440.

And also on a per-head basis, the region had the most expenditure for each person at £15,910.

The Office for National Statistics (ONS), in its country and regional public sector finances report for the financial year to April last year, shows that total public expenditure relating to Northern Ireland was about £30 billion, while the total value of tax revenue relating to the region was around £20 billion.

“In simple terms, it means the region had a net fiscal deficit - in other words we received more out of the UK tax and public spending system than we put in - of £10.3 billion, which compares to £10.1bn in 2018-19,” according to Dr Esmond Birnie, senior economist at the Ulster University Business School.

“In absolute cash value terms, some other UK regions had larger fiscal deficits than here, but none was so large on a per-person basis at £5,440.

“This position is an outcome of a combination of relatively high levels of public spending in Northern Ireland alongside relatively low levels of tax revenues generated.

“Both of these, in turn, are indicative of various structural weaknesses in the economy such as low levels of wages and productivity and high levels of reliance on welfare spending.”

And Dr Birnie warned: "We will have to wait another year or so before we get figures for 2020-21, but it is almost inevitable that, as a result of the Covid-related recession and associated government response measures, Northern Ireland’s fiscal transfer will have grown considerably beyond that figure of £10.3bn.”

Meanwhile the ONS said the overall level of government borrowing fell in April as the easing of lockdown restrictions started to regenerate the UK economy.

But levels of debt remain high as borrowing hit £31.7 billion - the second highest April on record.

Public sector net borrowing was £15.6 billion less than the same month a year ago, with central Government receipts at £58 billion - up £3.8 billion on April 2020.

The ONS also revised down its estimates for last year's total deficit, which hit levels not seen since the Second World War Two, from £303.1 billion to £300.3 billion - or 14.3 per cent of gross domestic product (GDP).

This was £27.1 billion less than the Office for Budget Responsibility's (OBR) most recent forecasts as the economy starts to recover following the vaccine rollout and lifting of Covid restrictions.

The amount of Government debt now sits at £2.17 trillion, or around 98.5 per cent of GDP, the highest ratio since the 99.5 per cent recorded in March 1962.

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