The Northern Ireland Fiscal Council has concluded that Stormont ministers are correct in asserting that the region receives less funding relative to need than Scotland and Wales.

In its annual review of the sustainability of devolved finances, the council determined that Scotland and Wales are funded above their assessed requirements, while Northern Ireland is at or marginally below its level of need.

The watchdog noted that it would be mathematically possible for Stormont to obtain between £1bn and £3.5bn in extra annual funding if the same methodology applied to the other administrations were used, but it cast doubt on the Treasury choosing that route.

The findings come amid a prolonged budget stalemate at Stormont. Finance Minister John O'Dowd distributed budget proposals to executive colleagues in December 2025, but no agreement has been reached. Departments have been operating under emergency procedures since the start of the financial year in April.

The council cautioned that the absence of an agreed budget undermines normal scrutiny and elevates the danger of overspending.

Examining the Treasury's open book review of Stormont's finances, the council said it broadly concurred with the review's direction but took issue with some specific conclusions. The Treasury review had estimated that introducing domestic water charges, raising regional rates and cutting thousands of public sector posts could free up £3bn annually. It also found the health service in Northern Ireland to be significantly less efficient than the English NHS.

Sir Robert Chote, chair of the Fiscal Council, described a clear challenge where spending demands are growing while funding lags. He warned that operating without a budget is manageable only briefly and that emergency measures cannot substitute for an Executive taking strategic decisions. Longer-term pressures will not disappear on their own, he said, and addressing them systematically would improve the prospects for sustainable public finances.

The council emphasised that even if a budget were passed, structural financial difficulties would continue to affect Northern Ireland.