Deputy First Minister Martin McGuinness, British Prime Minister David Cameron, Secretary of State Theresa Villiers and First Minister Peter Robinson.NI Investment Conference 2013/WikiCommons

Northern Ireland Secretary of State Theresa Villiers has described the future of the country’s coalition government as “grim” after negotiations failed to settle a stalemate on welfare reform yesterday.

“The situation looks increasingly grim ... and time is running out," Villiers said following the talks.

The Northern Irish government in Stormont currently stands in an unstable stalemate following the failed attempt of the Democratic Unionist Party (DUP) to pass a welfare reform bill, the Stormont House Agreement (SHA), through the assembly.

As it stands, the failure to pass legislation to implement these welfare reforms will see government departments running out of money in July.

Irish Minister for Foreign Affairs and Trade, Charlie Flanagan T.D., has called on Northern Ireland parties to resolve the issue and continue the SHA.

Speaking after the review meeting of the agreement yesterday, Minister Flanagan said, "I underlined the Irish Government's commitment to the implementation of the Stormont House Agreement. As all Parties to the Agreement know, the Agreement was hard won, as indeed were the power-sharing institutions which now have the primary responsibility of guiding it through.

“The seriousness of recent developments and of the consequences that decisions in the period ahead may have was acknowledged by all participants,” he continued.

The SHA, put forward by the DUP, was agreed at Stormont House last December, but last week Sinn Fein and the Social Democratic and Labour Party (SDLP) blocked the legislation from passing through the Assembly.

DUP Finance Minister Arlene Foster is currently under pressure to approve a Northern Irish budget, but the DUP has already made it clear that they will not support a budget without the implementation of these welfare changes and Nationalist parties are not willing to implement them.

The five NI political parties concur that a failure to find agreement on these reforms and finalize a budget could see Stormont losing responsibility for welfare decisions in Northern Ireland. Responsibility would transfer to Westminster without the consent of the Assembly.

Yesterday, attempts to find a solution saw Sinn Féin walk out of the all-party talks in Belfast, citing the actions of Britain as the reason for their unhappiness to accept reforms.

Sinn Féin leader Gerry Adams has said that British officials are not willing to "accept their role in provoking this crisis" and that by succumbing to cuts in the SHA, they will pave the way for further cuts from London in the next budget.

The DUP has accused Sinn Féin of putting the future of the Northern Irish government in needless jeopardy simply to bolster their image as an anti-austerity party ahead of expected elections in the Republic of Ireland.

Northern Irish First Minister and DUP leader Peter Robinson attended talks yesterday to present Sinn Féin with a take-it-or-leave-it budget but to no avail.

Sinn Féin rejected another budget from Peter Robinson yesterday.

Sinn Féin rejected another budget from Peter Robinson yesterday.

Secretary of State Villiers admitted that she saw little hope of a breakthrough on the stalemate following what she described as “fruitless talks.”

She called on Sinn Fein and the other republican parties "to deliver on their side of the deal" by renewing their previous agreement, which included easier access to British government loans and access to new funds made available to investigate unresolved killings during the Troubles.

Minister Flanagan, however, appeared slightly more optimistic of future developments.

“The Government wishes to see a resolution to the current political impasse as we have a clear interest in the integrity of the Agreement as a whole and in the implementation of the Agreement in its entirety, not least in relation to the Agreement's provisions on dealing with the legacy of the past,” he said.

“I believe that with political will, a way through the current challenges can be found. A solution will require exceptional resolve and leadership from all participants."

Minister of State for North/South Cooperation, Mr Seán Sherlock T.D. also expressed optimism that the Agreement can be confirmed during talks in Dublin later this week:

"The roundtable meeting today involving all the parties was a welcome opportunity to clarify the issues facing us at this challenging time. Both Minister Flanagan and I also had good bilateral meetings with each of the parties,” he said.

“The North-South Ministerial Council Plenary Meeting taking place in Dublin later this week will provide a further opportunity for dialogue as well as for bringing forward our work on North-South priorities as envisaged under the Stormont House Agreement."