IRELAND NORTH and South should strive to co-operate and prepare for the economic upturn when it comes, Ministers from Stormont and Dublin have said.

Minister of State at the Department of Finance Martin Mansergh told the 13th Annual Economic Conference outside Belfast: "We need to identify areas where we have competitive advantage . . . We need to position ourselves at the cutting edge of developments."

Deputy First Minister Martin McGuinness said: "As a small open economy we cannot shelter ourselves from the global marketplace, and short-term economic prospects are now less favourable than six months ago."

But he added it was important not to be "over pessimistic" and he cited "many positive factors such as the investment strategy which should support the construction sector and local economy through this period of slower growth".

He stressed: "One thing is clear, lessons need to be learned. From here on in, the practices that are creating this financial turmoil need to stop and responsible banking must be the watch word."

Despite the impasse stalling the Stormont Executive, Mr McGuinness said he and First Minister Peter Robinson were addressing the challenges of the credit crunch and high energy prices.

In his address Dr Mansergh said: "This includes defining and adapting to new markets and product developments."

"We need to position ourselves at the cutting edge of developments. Achieving this will not only require a strong focus on research and innovation but will also require us to be able to translate the results of RD into products and services that people . . . will want to buy and be able to get these to market before our competitors."

In one of many references to cross-Border co-operation and planning, he said: "Building strong co-operation between relevant bodies in both parts of the island can result in economies of scale and facilitate greater synergies at both business and sectoral level."

He encouraged executives in the financial sector in the Republic to consider opportunities in the North.

"There should be no doubt that we would view positively such firms availing of the opportunity for delegating some support functions to the North . . . There is every potential for the North to further its growing reputation . . . as a further bridge between the financial sectors in Ireland and the UK to the benefit of the island as a whole."