Vast NI spending hike during Covid crisis ‘just shows up the folly of united Irelanders’

Click here – Revealed: Massive Covid spending splurge in Northern Ireland is equivalent to having a second health department

Mr Wilson added that the numbers should also force the Stormont government to start considering the financial cost of Covid more, instead of just viewing it as a pure health problem.

The East Antrim MP served as Northern Ireland’s finance minister from 2009 to 2013, and before entering politics he taught economics.

He told the News Letter that the giant flood of cash into the Province to cope with Covid “does make a nonsense of all this Sinn Fein talk about ‘we want a united Ireland, and being part of Britain is bad for us’”.

Asked why is confident an all-Ireland nation would be unable to foot the Province’s current bill, he replied: “Sure Dublin had to borrow money from Britain [during the banking crisis] for goodness sake, and they haven’t paid it back!

“Dublin is never going to be able I think to take on the fiscal responsibility for Northern Ireland – no way.

“Anybody who contemplates these thoughts of a united Ireland is also contemplating a future of poverty.

“Now, maybe some people are prepared to eat dirt in order to meet their political ends.

“I think most people would prefer to eat turkey.”

Turning to the issue of what the surge in spending now may mean for the future, Mr Wilson said that the Province’s leaders are “fools” if they fail to see the that the current levels of Treasury “benevolence” will spell belt-tightening later.

The chancellor has already signalled that budgets will have to shrink to make up for the amount of spending during the Covid crisis said Mr Wilson, and the Stormont government must realise it cannot keep “acting like Santa Claus” forever.

“Robin Swann cannot keep on behaving as if the only issue that had to be considered by politicians were the medical issues,” he said.

“The debt that he makes in response to coronavirus also has huge economic impact.

“So far the Executive has been able to divorce those two things.

“It can’t do any longer.”

‘GOVERNMENT HAS HANDLED CRISIS WELL’

Dr Graham Gudgin, a Cambridge and Ulster University economics academic, believes the government has handled its finances during the pandemic crisis well.

When it comes to Northern Ireland, he says the roughly £15.4k of public spending per head is 14.5% above the UK average.

“The only region higher is London (mainly because of transport subsidies and teaching hospitals),” he said.

Out of all the extra government spending, the great bulk had gone on furlough costs, with health and social care also eating up a sizeable chunk.

But the way the government has paid for the spending hike is by effectively “printing the money” – a strategy that means “the cost to government has been low and should remain low; there is thus no doubt about sustainability”.

He concluded; “My view is that the Treasury has handled the pandemic very successfully.

“Unemployment has hardly risen and relatively few firms have gone bust.”

‘THIS IS ABOUT POLITICS, NOT JUST ECONOMICS’

Dr Esmond Birnie, a University of Ulster economist and ex-UUP MLA, said the big questions in the years ahead will not be just about spending, but about tax too.

“Is the increase sustainable?” he asked.

“Ultimately that is as much a political as economic question. [Chancellor Rishi] Sunak has built in quite substantial tax increases ...

“That, plus a now projected better-than-expected long-term recovery from Covid (though, of course, with new variants that could always change) means a higher level of spending is sustainable without having huge borrowing.

“But, we come back to the question: is that the preference of the UK public to have higher taxes going forward?

“And Sunak himself (and it all plays into the question of succession to Boris J) has expressed doubts in the sense of heralding he will start to cut taxes again before the next general election – but time is short and will he really manage that?”

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