NI economy: Budget watchdog warns of job cuts over pay claims

The funding deal from the UK government, which helped restore devolution, included £584m for 2023/24 to meet the cost of backdated pay awards.

There is a further £520m of “stabilisation funding” for 2024/25 and 2025/26 which the executive can use for any purpose.

The NIFC says that in practice that money “will be swallowed up by pay”.

The Department of Finance has told departments to plan on the basis of 3% pay growth and to find that money from their new budget allocations.

The NIFC says this means all departments start the fiscal year facing “an in-built wage-cost pressure” and warns “this might require further headcount reductions in some departments or could result in further strike action”.

It adds that it is open to the executive proposing a policy of pay restraint which “however unpopular and difficult, would improve the manageability of the NI public finances”.