Northern Ireland's first minister said the country's international reputation had been damaged by continuing violence following Belfast City Council's decision to restrict the flying of the union flag, on 14 January 2014.
Peter Robinson brought a 'matter of the day' to the assembly. There have now been more than 40 days of loyalist protests since the decision to fly the flag on designated days only.
Mr Robinson said a negative image of Northern Ireland was being presented around the world.
"Potential investors and tourists will be deterred and our local businesses have been crippled at a time when they needed a boost," he said.
He added that "nothing can justify this violence" and that although he defended people's right to "legitimate, lawful and peaceful" protests, he said too many had been marred in violence.
"You do not respect a union flag if you are using it as a weapon to charge at someone. You are not showing respect for the union flag if you need to wear a mask when carrying it," he said.
In his contribution, the deputy first minister alleged that two senior UVF (Ulster Volunteer Force)figures involved in orchestrating street disorder were well-known "drug pushers".
Martin McGuinness said the disorder needed to end.
He said this was a challenge to the power-sharing institutions by people who represented no-one but themselves, some of whom associated with British National Party (BNP) and who were to "some degree sectarian bigots."
He said he did not believe those involved in these disturbances represented the unionist people.
Alliance leader David Ford linked the current loyalist violence to events last summer when there was a challenge to the Parades Commission and leaflets whipped up tensions over flags.
He said there had been a "re-sectarianising" of Northern Ireland.
UUP leader Mike Nesbitt said there was a political way forward and the new Unionist Forum would discuss underlying issues such as "cultural identity, the economy and the perceived failure of politics".
Alasdair McDonnell, the leader of the SDLP, said a "one-sided forum" would not reduce tensions.
He said that all the political parties needed to come together to discuss cross-community relations.