The Northern Ireland Department for Social Development has confirmed that the City’s £360m Royal Exchange redevelopment has stalled because of the spending clampdown.
The department had planned to release £110m to fund land purchase and vital infrastructure works needed to breathe new life into the run down north east quarter of the city.
The scheme was expected to create 2,000 construction jobs as it got into full swing.
A development consortium made up of William Ewart Properties, Snoddon’s Construction and ING Real Estate Development UK had hoped to start the Royal Exchange project in the next couple of years.
The plans included a new anchor department store, shops, cafes, restaurants, a hotel, at least 200 residential units including affordable housing and 700 car parking spaces.
DSD minister Alex Attwood said he would be battling to make sure as much of the money as possible is returned to his department for other priority schemes.
He added: “I believe I will win the argument with my executive colleagues – that this essential work in the developing of town centres, in Downpatrick, in Belfast, in Dungannon and in Derry is of such priority that the lion’s share of the Royal Exchange money will be returned to my budget.”
Mr Attwood emphasised that the return of money intended for the Royal Exchange would help to relieve pressure on the executive’s budget, which is facing cuts of £500m.