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Radio 4's Today programme
"The economic consequences of failure"
 real 28k

Friday, 22 June, 2001, 15:13 GMT 16:13 UK
Northern Ireland's economic fears
Another riot of rioting has increased tension in the province
Another riot of rioting has increased tension in the province
By BBC News Online's Orla Ryan

The atmosphere is tense in Northern Ireland, following nights of rioting.

The results of recent elections - where hardliners gained seats at the expense of the centre - and the imminent start of the marching season have only served to heighten political uncertainty.

The images relayed around the world's media will likely stop tourists visiting the region, dealing an economic blow to a sector the region's government had hoped to develop.

The greater fear is that the troubles could discourage overseas investors from setting up business in Northern Ireland, stunting the growth the province has enjoyed in recent years.

Peace dividend

Throughout the 1990s, Northern Ireland has enjoyed one of the fastest economic growth rates of any region in the UK.

Unemployment is currently at its lowest levels since records began. It has fallen from a peak of 17.2% in 1986 to 6.2% in June 2001, 1.6% below the European Union average of 7.8%.

Increased social and economic confidence has been behind the 40% rise in house prices seen since 1996.

Canada's Nortel Networks and Japan's Fujitsu are among the companies that have decided to invest there.

Clearly, increased political stability has paid some economic dividends.


We work an 11-month economy here, because July closes down

Nigel Smyth, CBI
Not least in terms of the amount of people visiting Northern Ireland. During 1999, the number of visitors increased by 19% to 1.65 million while revenues increased at a similar rate to 265m.

But real and imagined fears about progress towards peace conspiring with the feared downturn in the world's economy could jeopardise this progress.

Tourism fears

The Republic of Ireland has always enjoyed a healthy tourism industry, something which Northern Ireland has hoped to emulate.

But while July is peak tourism season elsewhere, it is the marching season in Northern Ireland, where tensions are high as Protestant loyal orders commemorate past victories in battle.

The giants causeway is one of Northern Ireland's biggest tourist attractions
The giants causeway is one of Northern Ireland's biggest tourist attractions
"We work an 11-month economy here, because July closes down," the Confederation of British Industry's Nigel Smyth said.

"Tourism is obviously very vulnerable to all of this, there is massive potential which remains untapped," he added.

"When you add the setback from the foot-and-mouth epidemic to the present situation, it is pretty serious... It is only a small part of our [economy] so far but it is a growing part," John Stringer, chief executive of Northern Ireland's Chamber of Commerce said.

Inward investment

Longer-term political uncertainty could deter inward investment.

"The big issue is the uncertainty in terms of the political situation, there is a very deep concern within our membership that the instiutions could be suspended. We believe they have been working and are in the interest in business and the community of the whole," Nigel Smyth, director of CBI Northern Ireland said.

Already, increased lawlessness on the streets has made it more difficult for companies to provide services to certain communities.

But long-term, it is inward investment on which many in Northern Ireland have pinned their economic hopes.

It is this - combined with EU funding and targeted tax breaks - that propelled the province's economy into strong growth.

But these investors will be deterred by signs that the political situation has become more uncertain.

"There is no doubt that it does make inward investors think twice. They either take Northern Ireland out of their thinking frame or delay investment, or their shareholders say why should you invest in a country where there is not the stability you would expect?" Geoff McEnroe, director of the nine-year old North/South trade and business development programme, said.

"The companies that have invested here have done very well here and continued to reinvest.... Our real issue is an image problem," said the CBI's Nigel Smyth.

Tech shift

Northern Ireland, like other parts of the UK, has seen the emphasis shift from traditional areas, such as textiles and shipbuilding, to new economy industries.

"Our software and telecoms sector has grown from a 1,000 jobs 10 years ago to 9,000 currently," Nigel Smyth said, pointing to a simultaneous decline in jobs in textiles - a move mirroring that seen in Great Britain.

While the fate of these investments may in part hang on the vagaries of the international economy, the future of the peace process also plays a role.

"There isn't a sufficient appreciation of the peace dividend," added Nigel Smyth.

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