The Northern Ireland Executive is set to receive £117m less than planned over the next four years because UK government funding has been moved from infrastructure into defence, according to Finance Minister John O'Dowd.

O'Dowd said the change was "a major blow at a time when additional investment in areas such as critical infrastructure and social housing is urgently needed".

He explained that the reason for the loss was that money is being directed to military spending.

The Treasury has been asked for comment.

The change relates to a budget reprofiling first announced by the UK government, which shifted some capital spending from other departments into defence. Chancellor John Healey confirmed the move in Wednesday's Budget, stating that the Defence Investment Plan was being fully funded through capital reprioritisation across Whitehall.

Northern Ireland loses out because defence is not a devolved matter. The devolution funding formula gives Northern Ireland a population-based share of additional spending allocated to public services in England, but only for services that are devolved. When money moves from devolved areas to defence, the devolved administrations see a reduction.

The UK government has argued that increased defence spending benefits all parts of the UK through contracts for arms manufacturers and other businesses. For instance, Thales, a French arms company, is expanding its operations in Northern Ireland after winning a large contract to supply missiles to Ukraine.