A local politician has reacted to news that Ireland is in the midst of its worst ever financial slowdown - while another has applauded the level of new homes being built.

SDLP Finance spokesperson Declan O'Loan said the latest economic report predicting a prolonged recession underlines the urgent need for a budget to promote economic growth.

"We now urgently need a recast budget to put available funding into areas such as social housing which will get people back to work quickly."

He was commenting this morning on the report, by accountants Ernst and Young, which claims the all-island economy will shrink by 7% this year.

It adds that Northern Ireland and the Irish Republic could each still be 12 months to two years away from economic growth.

However, NI Social Development Minister, Margaret Ritchie, has today welcomed news that plans are on track to deliver this year's social housing target.

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She said that, to date, 508 new homes have been started and a further 522 have been completed: "My first and foremost priority is to increase the supply of social housing.

"This year I have set aside £155million to provide 1,750 new homes and we are well on target to deliver.

"We now move into the second part of the year, when the majority of houses will have cleared planning permission and can be delivered on the ground.

"This is a landmark year for social housing with plans to deliver 1,750 houses for the first time in over a decade," she concluded.

The contrasting views come on the same day the recession warning was given.

One of the report's authors said that while there are some signs of recovery, there is a possibility of a "double-dip" recession.

A "double-dip" recession occurs when the economy contracts after a quarter or two of economic growth.

If that does happen, it is sometimes a sign of a deeper and more prolonged recession.

Mr O'Loan said: "The report is very stark: the all-Ireland economy may continue to decline for another two years. We need a budget that is fit for purpose in a recession and we don't have one.

"The three-year budget was set at the beginning of 2008 when growth was strong and the housing market was booming.

"By the summer of that year when the first signs of decline set in, the SDLP called for a new budget designed to boost jobs.

"DUP finance ministers have routinely rejected this idea on the basis that no new money was available, but earlier this year in our document 'New Priorities for Difficult Times', we showed that money could be found to boost building in particular and to protect the jobs we have and create new ones.

"It has been done in Scotland and elsewhere in Europe and we can do it here, even without taxing powers," he insisted.

(BMcC/GK)