Belfast Briefing:Hands up if you have ever used one or more of the following - Milk of Magnesia, air-conditioning or a rechargeable battery, writes Francess McDonnell

Do you know whom you have to thank for these potentially life-saving inventions? Northern Ireland. Or more precisely the brilliant minds that hailed from Northern Ireland.

Sir James Murray, Samuel Davidson and Dr James Drumm are some of the North's great inventors but they are not unique; they are just three of many, past and present.

Northern Ireland has a proud tradition of innovation, from John Dunlop with his pneumatic tyres to Queen's University's Dr Gerry Hanna and his new scanning technique to improve radiotherapy treatment of lung cancer.

Northern Ireland's original entrepreneurial image may have been buried in the political rubble over the past four decades but it is staging a comeback. New contenders, who could be the great inventors of the future, include the likes of Sophia Search Limited, a team of four PhD students which has devised a groundbreaking search engine to deal with large volumes of electronic data.

They are not alone. There is a wealth of new talent emerging from the North's universities. Spin-out companies such as Fusion Antibodies, which is working on the development of antibody-based drugs for cancer, and Diabetica Limited, which is developing new strategies and products for treating diabetes and obesity, are just two of the exciting companies to watch for.

Being an entrepreneur is fraught with excitement and peril in equal measures. Not only do you need the blessing of brilliance, you need a fair degree of luck and a whole lot of finance to make your dreams come true.

The problem with getting finance is that it requires a leap of faith and Northern Ireland may not be exactly best placed to generate the level of confidence needed to inspire investors to make that leap if new economic indicators are to be believed.

According to the Ulster Bank purchasing managers' index for Northern Ireland for December, published yesterday, established companies said there was a deterioration of business conditions towards the close of last year.

The report claims levels of business activity and new orders both fell for the first time in 4½ years while price inflation rose and employment declined - not exactly an ideal environment for businesses with a track record, but for those starting out, it is a nightmare scenario.

Ulster Bank economist Richard Ramsey says there is no doubt the economy will slow in 2008. "Northern Ireland experienced record highs during the first half of 2007 but, in the final quarter, there was evidence that a combination of factors resulted in a significant slowdown.

"The whole credit crunch and the marked rise in costs had a double impact on some companies. One of the more negative indicators was the slowdown in the construction sector in the last quarter - it is probably not going to pick up until the second half of 2008."

He believes the impact of the slowdown of the construction sector on the wider economy will lead to slower levels of growth in 2008.

Ramsey says one of the most worrying indictors in the current report is the fact that new orders have "gone negative".

"The Ulster Bank PMI report is based on fact - what's actually happening in the marketplace. It doesn't reflect sentiment and when we are being told that new orders have fallen for the first time in 57 months in December, that is significant.

"What this means is that companies may be reluctant to hire new staff - we have already seen some contraction in the workforce for the first time in 22 months in December . . . The question is now whether this is the beginning of a trend or just a one off."

Ramsey believes weakening business conditions could have an impact on business confidence in the short term. "We have to wait and see how businesses react. If we see the cost base increase intensify, it could have a very serious knock-on effect on confidence."

The change of economic climate comes as sterling fell to an all-time low yesterday against the euro. According to some economic experts this could be a very positive development for some Northern companies.

Angela McGowan, senior economist with the Economic Research Institute of Northern Ireland says that in theory weaker sterling could boost sales for exporters.

"Foreign demand for UK/ Northern Ireland goods should rise but it should be remembered that the principal destination of Northern Ireland sales is Great Britain," Ms McGowan said.

"Northern Ireland may not benefit as much from this depreciation as it would have had export sales been higher to euro and dollar consumers.

"A boost to the economy in terms of external demand is always welcome and hopefully should counteract lingering cost pressures on local companies."

For some, currency pressures, rising costs and the general state of uncertainty may make them wish they had one other Northern Ireland invention close to hand - Sir James Martin's modern-day ejector seat.