North's Minister for Enterprise faces hard times and tough decisions

BELFAST BRIEFING:Among Arlene Foster's most pressing problems are the 60,000 jobless

BUSINESSES IN difficulties cannot expect a bailout from the Northern Ireland Executive, the North’s newly reinstated Minister for Enterprise has warned.

Arlene Foster says despite her concern about the manner in which some banks are dealing with corporate customers and issues over availability of finance, there is no money in the pot to help out local businesses.

Foster is aware that some lobby groups in the North believe the Executive should step into the gap banks formerly occupied before the fiscal crisis altered the agenda.

Evidence suggests there is less credit available to certain businesses now and fewer lending decisions are being made by key banks at a Northern Ireland level. There has also been a notably sharp increase in the number of banks taking aggressive action against clients experiencing financial difficulties, with Anglo Irish and Bank of Scotland Ireland appearing to take the lead in this.

Foster says she is worried about how this will affect the local economy. But she claims the fact that the Executive has no regulatory control over banks operating locally leaves the North completely at their mercy.

“We do need to speak to [UK] treasury again about the need to look at the banking system and the fact that there is no indigenous bank in Northern Ireland,” she says.

But the Minister has ruled out any prospect of the Executive providing assistance, such as short-term loan guarantees. “We are down £400 million (€448 million) on our budget so the prospects of that happening are nil.”

However, she has disclosed that there are discussions under way at economic development agency Invest NI to see if it can help small firms access finance.

Getting credit flowing is just one of the challenges facing Foster. She is the first to admit there “is a lot to do” and, although she is glad to be back it is difficult to see how she will make a dent in the most pressing problems. There are about 60,000 people out of work and the results of two economic surveys suggest the figure is set to rise.

The latest Ulster Bank Purchasing Managers Index, which measures business activity across key sectors, paints a grim picture of the local economy. Firms have continued to report significant falls in new business and export orders and as a consequence have axed jobs.

Northern Bank has also warned that the North’s recovery is “far from spectacular”. It has revised its annual growth forecasts down to 1.1 per cent for 2011 and 2 per cent for next year.

Foster claims reforms are under way and a “transformation process” is in place which will help shape economic policy.

She is also championing the North’s right to secure from the treasury the autonomy to set its own rate of corporation tax. The fact that Scotland would like similar powers has only strengthened her determination.

“We believe we have a different reason – not least because we share a land border with the Republic and we are coming out of 40 years of conflict – so we believe we have a very special case to make,” Foster says. She does not shy away from the fact that it will affect the block grant.

“It is going to cost money. But I think the benefits will outweigh the cost to the block grant in other taxes that we will be able to draw down and in the rising-tide effect,” she says.

With DUP ministerial colleague Sammy Wilson reappointed to the finance portfolio, she is keeping a close eye on what the National Asset Management Agency is doing both sides of the Border.

She is also conscious that the state of the economy in the South has had a significant impact on trade and exports with the North. Foster says she is also aware of many firms in the North which previously did work in the South but just “cannot get paid”, particularly when it comes to the construction sector.

The Minister says this is one of the key reasons why Northern Ireland companies need to broaden their horizons. “Exports will be a big focus over the next four years.”

She also emphasises securing foreign direct investment and sees great potential in focusing efforts on wooing the next round of investors from Brazil, Russia, India and China.

But despite the challenges, Foster remains upbeat.

“If the recession has taught us anything, it is that the world is a global village and we cannot just sit in Northern Ireland and expect everything to happen for us here.”