NI faces 'public spending crunch'

http://news.bbc.co.uk/go/rss/-/1/hi/northern_ireland/8044968.stm

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Northern Ireland is facing a public spending crunch, according to an economist with the Ulster Bank.

Richard Ramsey has said the bank's quarterly review points to an easing of the recession next year.

However, he added that NI's reliance on public money meant it would be harder hit by government cutbacks.

He said from 2011, efficiency savings of at least £200m a year will have to be made and Northern Ireland's economy "needs to reinvent itself".

"Against the more austere public expenditure environment, the Northern Ireland Executive needs to accelerate and deepen public sector reform.

"There is now increased urgency to reduce expenditure and raise revenues, and tough decisions have to be made," he said.

Mr Ramsey predicted that unemployment in Northern Ireland will rise above 8% by the end of 2009 and will average 9% in 2010.

However, he said unemployment will fall back moderately in the second half of next year as the economic recovery takes hold.

He also believes the worst of the recession could have passed.

"It is our belief that the very worst of the downturn is behind us, and, whilst the Northern Ireland economy will experience a deep contraction of around 4% this year, we expect it to return to modest growth in 2010," he said.