His report, published on Monday, noted that the Northern Ireland economy has historically been reliant on public sector investment for its growth, but that political progress over the last ten years to transform Northern Ireland to a peaceful, stable society has already helped attract inward private sector investment.

The restoration of devolution on 8 May is a major turning point and incentive for such further inward investment. Sir David, therefore, recommended a strategy to develop private sector investment in Northern Ireland based on maximising the benefits of the competitive advantages that already exist in Northern Ireland, including current financial investment incentives, and realising the potential further to improve this competitive advantage.

The report also recommended further improvements in basic and technical skills, reducing the size of the public sector and improving efficiency, better university and business collaborations; and promoting trade and investment across government, working with Invest Northern Ireland, the Irish Investment and Development Agency and UK Trade and Investment.

Sir David announced on Monday that:

"I have reviewed all the evidence carefully and visited both Northern Ireland and the Republic of Ireland. While there is not a clear and unambiguous case for changing corporation tax in Northern Ireland beyond the UK-wide measures announced in the 2007 Budget, I am convinced that, in the light of the successful peace process, Northern Ireland can potentially emulate the economic success of the Republic."

"I am encouraged by the commitment to economic growth shown by the UK Government, the Northern Ireland Executive and the Irish Government as well as by the private sector. I hope that my report will provide a positive contribution to the development of economic policy in Northern Ireland."

The UK Government also revealed on Monday that a second review would be conducted by Varney, building on the first review and focusing on identifying further measures to promote private sector investment.

It explained that:

"In the light of Sir David Varney's review of Tax Policy in Northern Ireland, published on 17 December and the Northern Ireland Executive's draft Programme for Government and draft Budget published in October 2007, Sir David Varney will undertake a second review."

"Building on Sir David's earlier analysis and agreement from all parties about the unique circumstances of Northern Ireland (in relation to the opportunities provided by the peace process, the need to strengthen the private sector, to create increased employment opportunities and to reform the public sector) this review will explore in more detail how to expand the private sector and to enhance Northern Ireland's competitiveness."

"In this context, the review will look at incentives for supporting the sustainable growth of businesses, investment and employment in Northern Ireland and the implications for reducing the historic dependency on the public sector. This will include examination of incentives for growth in Northern Ireland that fall within the responsibility of the Northern Ireland Executive and the UK Government."

"Sir David will aim to report in good time for the US Investment Conference. He will be supported by a small secretariat and will receive direct and regular input from Northern Ireland Executive officials."

Welcoming the publication od Monday's report, UK Chancellor, Alistair Darling, stated that:

"I welcome Sir David Varney's report, which provides a professional and in depth analysis of the case for a lower rate of corporation tax in Northern Ireland. The Government accepts his finding that there is no convincing case for such a change."

"The Government also endorses Sir David's findings that the Northern Ireland economy is already benefiting from the peace process and that there is substantial scope, which Sir David has outlined, for building on this in the future."