Osborne reportedly set to back NI corporation tax devolution

Northern Ireland shares Britain's 21% corporate tax rate, much higher than a 12.5% rate in the Republic of Ireland that has helped the country become one of the largest recipients of US foreign direct investment.             

The FT said Mr Osborne would signal his support for devolving corporate tax to the province in a half-yearly budget statement tomorrow, although the move would be unlikely to take effect until after May's national election.

Northern Ireland has lobbied the Westminster government to allow it to cut its corporate tax rate to better compete for jobs with the Republic of Ireland.

Any such move is likely to please the DUP, which, with eight seat and amid opinion polls mostly showing the Conservatives narrowly behind Labour, could become potential allies for Prime Minister David Cameron.

Such a devolution of power could further strain the union between the four nations of the United Kingdom, which avoided a break-up in September when Scotland voted against independence.

Last week Britain's main political parties agreed to further dismantle its highly centralised system of government by striking a deal to grant Scotland more powers, including the ability to set income tax rates. It stopped short of allowing Scotland to control its rate of corporate tax, and any move to devolve powers to Northern Ireland is likely to be controversial.