Confidence low within business

Business confidence remains low among companies in Northern Ireland's manufacturing and service sectors, according to the latest survey from the local Confederation of British Industry.

The survey, carried out at the end of May, shows confidence has declined markedly since the previous report three months ago. Export demand remains weak, with no growth in sales to the Republic, and only a small increase in exports to the rest of the UK, a rise described as "encouraging" by CBI assistant director Ms Deirdre Stewart.

"The few positive signs seen in the previous survey have unfortunately not carried through to this one," Ms Stewart said. "The strength of sterling is hitting all sectors very badly in terms of both exporting and for import substitution of products which would previously have been sourced from within the UK."

There were also signs of increasing skills shortages across a range of industries, from information technology and management consultancy to sales staff. There is also an increasing problem in finding people prepared to do shift work.

CBI chief economist Ms Kate Barker told a meeting of business leaders in Belfast that the short-term prospects for the UK economy were "reasonable, though not particularly rosy".

Ms Barker said Northern Ireland was particularly vulnerable to competition from other EU countries because of its land border with the Republic, which had already joined the single currency.

A report by the Northern Ireland Preparations Forum said many customers based in Europe, or already trading with European companies, would consider switching their business to companies which invoiced in the single currency.