Northern Ireland in 2025: Balancing Budgets, Brexit, and Environmental Challenges

First Use of Stormont Brake

In late 2024, Unionist parties in the Northern Ireland Assembly pulled the Windsor Framework’s “Stormont Brake” for the first time in an attempt to stop new EU rules on packaging and labelling of chemicals from applying in Northern Ireland. While Unionist MLAs have now got the ball rolling, it’s up to the UK Government to decide in 2025 if the Brake has been appropriately pulled - i.e. if the proposed changes in EU law pose a significant enough threat to the everyday life of those in Northern Ireland. If Westminster approves of Stormont’s use of the bake, then they will notify the EU that the brake has been triggered, and the EU will either suspend the law’s application to Northern Ireland, or ask the UK for further explanation. If Westminster doesn’t approve of the brake, the EU packaging law will continue to apply in Northern Ireland. In this case, any outcome might be solely political and entirely new ground. 

The Stormont Brake is an innovative yet complex mechanism designed to balance competing interests in post-Brexit Northern Ireland. While it aims to enhance democratic oversight, its practical effectiveness and political acceptance remain uncertain, compounded by broader tensions over Brexit’s impact on Northern Ireland’s governance and identity. For the UK Government, the political stakes are high; any perceived antagonism surrounding the Stormont Brake or Windsor Framework could undermine its efforts to “reset” relations with the EU this year.

The UK-EU “Reset” 

During the 2024 general election campaign, Labour pledged to “reset” the UK’s relationship with the EU, while firmly ruling out a return to the single market, customs union, or freedom of movement. Rachel Reeves has championed the idea of a “business-like” relationship between the UK and the EU, focused on breaking down trade barriers, fostering investment opportunities, and facilitating cross-border business.

Now, 2025 appears poised to become the “year of reset” that Prime Minister Keir Starmer has been seeking, with the UK invited to an informal summit of EU leaders early in the new year - the first such invitation since the Brexit negotiations. However, for Stormont, this potential UK-EU reset could heighten uncertainty and exacerbate political tensions, further straining the already fragile relationship between Northern Ireland’s governing parties. Compounding the challenge, the recent triggering of the Stormont Brake may make Starmer’s ambitions for a reset more complex than initially anticipated. Such a move risks eroding trust with the EU, which places a high priority on adherence to agreements such as the Windsor Framework.

Improved relations and greater cooperation between the UK and the EU could bring significant benefits to Northern Ireland, but substantial challenges remain. Unionists’ concerns over sovereignty persist, and the regulatory divide is far from resolved, with or without the implementation of the brake. Rebuilding trust on all sides will be critical, but this is easier said than done, particularly as support for Reform appears to be gaining momentum.

Stormont Budget 2025

Stormont’s Draft Budget, released in December 2024, outlined plans for increased spending in the coming year. This follows the October announcement by Rachel Reeves, allocating £18.2 billion to the Northern Ireland Executive for 2025/26—the largest allocation in real terms in the history of devolution. While this record funding provides an opportunity for Northern Ireland to address its spending issues and reduce its deficit in 2025, challenges remain. The Executive will need to exercise fiscal discipline to avoid the overspending seen in previous years. This task is made more urgent by Finance Minister Caoimhe Archibald’s warning in September, when she urged colleagues to take “urgent action” to rein in spending, revealing that departments were already overcommitted by £767 million.

Despite his department being set to receive the biggest piece of the pie, Health Minister Mike Nesbitt has said there is “room for improvement” in the Draft Budget, saying that the allocation doesn’t align with the Government’s priorities, one of which is supposed to be cutting waiting lists. Another minister facing difficult decisions in 2025 is Environment Minister Andrew Muir, who says that if the Draft Budget goes ahead, he’ll have no additional tools to address the blue-green algae in Lough Neagh. With the Executive launching a 12-week consultation on the Budget, we’re sure Ministers will eagerly await March when the consultation closes and they can share their cost-cutting (and likely unpopular) solutions with the public. 

Water Infrastructure Improvements 

Northern Ireland’s upcoming 2025/2026 Budget brings promising news for some, with the draft allocating £100 million in capital funding for housing and over £105 million for Northern Ireland Water and wastewater infrastructure—essential investments that the public and economy urgently need.

House building in many towns across Northern Ireland is at a stand-still as the already-overburdened sewage network can’t support any more homes. According to the Communities Minister, NI needs to build 100,000 homes by 2039 - this will be impossible if improvements aren’t made to wastewater infrastructure. With many eager to get building and others suffering from surging house prices this year, the public will be hoping that the investment in water infrastructure outlined in the Budget will be enough to solve this housing crisis. However, while these allocations are steps forward, experts stress that it won’t be enough and that more substantial, multi-year investments may be needed for any real progress to be made. They’re not the only ones. Westminster’s Northern Ireland Affairs Committee reported that organisations from across health, education, criminal justice, infrastructure and the voluntary sectors have all emphasised the harm caused by single-year budgets. 

While the Northern Ireland Fiscal Council has highlighted the limitations to the stability of a multi-year budget it has encouraged the Executive to do more around revenue generation and cost-cutting. One area it has identified is the introduction of explicit domestic water charges. Seemingly as ever, how much and who pays remains the trickiest of questions.

Environmental Improvement Plan

In September, the Executive approved Northern Ireland’s first Environmental Improvement Plan (EIP). This comes after they were reprimanded by the Office for Environmental Protection for failing to have a plan in place by July 2023, as stipulated by the 2021 Environment Act. The plan outlines the Executive’s commitment to six strategic outcomes relating to air, water, and land quality, accessibility, wildlife, sustainable consumption, zero waste, and greenhouse gas emissions. Northern Ireland doesn’t have the best track record when it comes to emissions - in 2021, their CO2 emissions per capita were 5.4 tonnes higher than the per capita figure for the UK. While progress has been made to reduce Northern Ireland’s emissions since 2021, it’s still likely the Executive will still struggle on this front, given the importance of the agricultural sector to the Northern Irish economy. Environment Minister Andrew Muir has called the 2025 budget allocation for addressing the blue-green algae crisis in Lough Neagh “disappointing.” Highlighting the need for additional investment to secure a long-term solution, Muir’s remarks deepen concerns about the broader effectiveness of Northern Ireland’s EIP without robust policies and further development.