The UK government is pausing funding of City Deals in Northern Ireland.

The deals are regeneration funding packages worth more than £1.5bn with about £600m coming from central government.

The implications of the pause are not yet clear, but Northern Ireland’s First Minister Michelle O’Neill described it as “unacceptable and deplorable”.

It is understood the pause has happened in the context of the UK spending review and the government does not want to commit funds before that process is completed in October.

That means the deals could be ‘unpaused’ then, although Stormont ministers want that to happen immediately.

There are four deals in Northern Ireland: the Belfast City region, Derry City and Strabane, Mid South West region, and Causeway Coast and Glens.

O’Neill called the UK government’s approach “extremely short-sighted”.

“These City and Growth Deals will be game-changers for the regeneration of our cities and towns and a catalyst for economic growth and creating good jobs,” she said.

“It’s crucial that they continue as planned.”

Deputy First Minister Emma Little-Pengelly said Stormont officials “were informed of this potential direction of travel on Wednesday”.

“We raised this during a meeting with the Chancellor in London on Thursday, spelling out the dire consequences such a decision would have and urged for a reconsideration,” she said.

“Departments and deal partners will be urgently assessing what this pause means for the City and Growth Deals projects moving forward.”

Stormont’s Finance Minister, Caoimhe Archibald, said she has written to the Treasury “calling on them to immediately reverse this reprehensible decision”.

She pointed out that it has come “less than a week before the scheduled signing of the Derry City and Strabane Deal”.

“The British government have said it’s attempting to reset relationships; instead, they have acted in very bad faith,” Archibald added.

“I am calling on them to step up and honour the commitments and pledges made on City Deals, where significant plans and contracts have already been put in place at significant cost to local councils, project promoters, the Civil Service, and Whitehall Departments.”

A portion of the money expected from the unsigned Derry City and Strabane deal has been earmarked to help fund the medical school in Derry.

The £300m deal also involves plans to redevelop Strabane town centre; establish a DNA museum in Derry and open a centre for innovation in data analytics, advanced manufacturing and robotics.

A spokesperson for Derry City and Strabane District Council said: “We have received no formal communication of this [pause] and have no further details at this stage.”

But the Foyle MP Colum Eastwood, from the SDLP, said people involved in the Derry deal had “fought for years to get to this point” and said the pause was “devastating”.

“Significant and substantial investment plans are now facing undue delay and disruption with no certainty or clarity ahead of the Comprehensive Spending Review,” he said.

The Belfast deal was first announced in 2019 and was formally signed off in December 2021.

At the time it was hailed as a “once-in-a-generation opportunity” which could create about 20,000 jobs over10 to 15 years.

The Belfast deal is not just limited to the city itself but is funding projects stretching from the north of County Antrim down to County Armagh.

It was also the most far advanced in terms of the progress of construction on capital projects.

Work began in the summer on building an Advanced Manufacturing Innovation Centre (AMIC) at the Global Point business park in Newtownabbey.

Other projects in the pipeline seeking funding from the Belfast City Deal include:

On Friday evening, a Belfast City Council spokesperson said the council “has not received any formal correspondence at this stage and is seeking clarification in relation to the potential implications of this pause”.

Roger Pollen from the Federation of Small Businesses (FSB) said pausing the City Deals was “deeply troubling to businesses” because it has “introduced uncertainty” around the funding of major investments.

“Everybody knows the last thing that businesses like is uncertainty, because how do you plan on your investment, your structures and everything else?” he told the BBC’s Evening Extra programme.

“The fact that it’s being paused without any clarity around why it’s being paused, what that’s intended to achieve; what it means; how long it’s being paused for all feeds into the uncertainty around this.”