Indecision on budget will damage economy

BELFAST BRIEFING:IF THE volume of traffic speeding along the Newry bypass is anything to go by on a cold autumn morning there appear to be no visible signs of the economic tremors threatening both parts of the island.

Cars and lorries bearing Irish number plates zip past their Northern Ireland counterparts and vice versa as the key economic corridor between North and South bears testimony to the strength of the trading relationship between the two.

The ease of transition for businesses wanting to export from either part of the island or invest from one location to the other has been one of the great successes of both economies in the last decade.

It is estimated by the business development body, InterTradeIreland, that total cross-Border trade totalled more than €3.3 billion in 2008.

In Northern Ireland exports to the South deliver in any average year a £2 billion boost for the local economy. The North’s ability to attract tourists and shoppers from the South has helped sustain jobs and injected millions of euro into communities not just in border towns and cities. There is also the fact that companies across the Border employ thousands of people in the North.

According to latest statistics from the Department of Enterprise the majority of foreign owned business, an estimated 35 per cent, were from the Republic.

Where once Northern Ireland businesses looked across the invisible Border with envy, today is it with a mixture of apprehension and sympathy that they glance south.

Northern Ireland is battling its own economic spiral of despair as the recession, which appears to be lifting in the rest of the UK, continues to tighten its grip.

Not only do business owners and entrepreneurs fear a knock-on effect from Dublin’s economic troubles but they are also developing a growing sense of frustration with political leaders over their failure to seal a deal which will establish a budget for the period up to 2015.

The draft budget should in theory be already signed off and have been published for public consultation. But local politicians, perhaps mindful of an election looming next year, have failed to reach an agreement

The Finance Minister Sammy Wilson has warned that in a worse case scenario Northern Ireland could be forced to cut £4 billion from its overall budget over the next four years as part of the UK government’s campaign to reduce public expenditure budgets.

That is probably why the Secretary of State for Northern Ireland, Owen Patterson, is keen to see “clarity” on the budget and why he has urged political leaders to draw up a budget “quickly”.

But with hard decisions to be made the North’s inexperienced ministers have struggled to agree a budget in the middle of an economic crisis.

It is the first time in the Assembly’s short history that political leaders are faced with making cuts to budgets rather than unveiling increased spending plans. Business bodies have warned that any indecision will further disadvantage an already struggling economy.

Francis Martin, president of the Northern Ireland Chamber of Commerce said politicians just “have to get on with it” and show “decisive leadership”.

“Businesses are very willing to work with the Executive we will support any efforts to create a sustainable economy that will create growth and jobs.

The North’s Deputy First Minister Martin McGuinness has stated firmly that he has “considerable confidence” that all of the political parties can agree on a budget for Northern Ireland.

But Roger Pollen from the Federation of Small Businesses believes “the stark reality is that time is rapidly running out” for the Executive to set a budget.

Pollen says the implication for Northern Ireland is that businesses will not have time to prepare for the “inevitable changes” that are coming their way.

“There is a need for a fully informed and rational approach to this budget.” Whether that rational approach materialises in time to help the Northern Ireland economy remains to be seen.