Cuts in university research funding could wipe out any possible peace dividend for the local economy, according to Prof George Bain, vice-chancellor of Queen's University.

At the university's winter graduation ceremony, Prof Bain said cuts of around £6 million sterling (€9.6 million) a year were eroding the research capability of both Northern Ireland's universities. "Education and training, research and development, are the keys which will unleash Northern Ireland's economic tiger from its cage," Prof Bain said. "However, there is a real danger that these keys could be thrown away."

He said the cuts were being made at a time when similar grants to universities in the Republic and Britain were being increased. Spending on university research and development had declined by 30 per cent in real terms over the past seven years, he said, compared with an increase of 9 per cent in Britain.

In the Republic, the government had last year announced a three-year £220 million research package.

"You do not need a PhD to work out who will have the competitive advantage," Prof Bain said. "University research underpins economic development, and the cutbacks are undermining the government's aim of creating a technology-driven economy. If Northern Ireland is to have sustained prosperity as well as peace, then we must increase our investment in high-quality research and development."