If the current outbreak of foot and mouth disease spreads to Northern Ireland, it could have catastrophic consequences for agriculture. This is the view of Mr Stephen Kingon, the managing partner of the Belfast office of Pricewater houseCoopers, which has just released its latest report on the UK economy.
Mr Kingon says another crisis in the industry, just when it is recovering from the problems caused by BSE, could do serious damage to the image of Northern Ireland produce in overseas markets.
UK Economic Outlook and Regional Trends, which was compiled before the current outbreak of foot and mouth, identifies what it describes as the "twin-speed" nature of the Northern Ireland economy, in which the service sector and some manufacturing industries are performing well, while more traditional areas such as textiles and agribusiness are continuing to contract.
"The local economy has performed remarkably well in recent years," Mr Kingon said. "But we cannot become complacent. "With continued job losses in the textile sector, uncertainty over the future of the political institutions, and a threat to the survival of agricultural exporting, we need to see total unity of purpose among politicians and the business community to put the economy at the top of the political agenda."
The survey examines the performance and prospects of 12 UK regions in the context of global and domestic economic pressures. The report says that even though UK economic growth slowed during the second half of 2000, there is no evidence as yet of the kind of sharp downward spiral in business and consumer confidence experienced by the US economy in recent months.
There are also opportunities for Northern Ireland to benefit from its status as a low-cost area. According to the survey, businesses and financial services companies are increasingly looking to lower-cost regions in preference to more expensive areas such as London and Dublin.
Mr Kingon says rising housing and labour costs in the English and Irish capitals are persuading investors to look at other regions, and that this is good news for Northern Ireland.
"We believe London housing may be up to 20 per cent overpriced, while labour shortages in Dublin are accelerating the problem of wage inflation. Over the next decade we need to create over 120,000 jobs to take account of the growing population. "And as major investment areas like these become overpriced, Northern Ireland has a great opportunity to sell itself as a location for foreign direct investment."
Mr Kingon said it was too early to write off textiles and the agrifood industry, but he warned they still faced a difficult future. "Innovation and technology will give these sectors the chance to remain competitive," he said. "But there will be continued contraction of jobs, and unforeseen crises like foot and mouth can overturn strategies overnight. "We must therefore take advantage of rising costs in other regions to attract the kind of new investment which will stimulate the local economy."
The survey also contains evidence of Northern Ireland's growth in the IT and call centre businesses. The region has some 8,000 call centre jobs, either in place or promised, although continued growth in this area is causing labour shortages and some wage price inflation.
While forecasting a gradual slowdown in economic activity, the PwC survey also acknowledges that the pressures on the world economy have increased in recent months, and that a sharper decline could knock up to 1 per cent per annum off UK growth over the next three years.
"We are certainly not predicting a UK recession," Mr Kingon said. "But the risks are clearly there, and cannot be ignored.
"We are recommending that businesses and policy makers should make contingency plans to cover the possibility of a sharper than expected downturn in international economic activity over the next year or two," he added.
