'Radical change' needed in North's economy

A "veneer of prosperity" hides serious weakness in the Northern Ireland economy, according to the latest Economic Review by PricewaterhouseCoopers (PwC).

The 24th annual review of Northern Ireland's economy by PwC found that the region's economic growth was driven by government spending and retail sales, rather than private sector exports and competitiveness.

The reports says Northern Ireland has experienced a steady decline in its stock of internationally competitive companies and warns that it no longer has enough large firms with the capacity to make the large-scale business investments needed to kick-start the economy.

PwC managing partner Mr Stephen King said it was unlikely Northern Ireland could return to the levels of economic growth experienced in the late 1990s unless it pro-actively addressed the underlying structural weaknesses in the economy.

"Northern Ireland cannot rely indefinitely on public expenditure to drive the economy," he said. "Radical policy change is needed to encourage entrepreneurs and stimulate investment."

The firm predicted that economic growth in Northern Ireland would be 2.2 per cent in 2003, slightly ahead of the UK. It said that business performance in 2002 was disappointing, with manufacturing output contracting sharply and manufacturing jobs dipping below 100,000, the lowest level since records began.

Average earnings grew by 4 per cent in 2002, below the UK figure of 4.8 per cent. Average house prices rose by 5.3 per cent, well below the UK average of 26.3 per cent.

The region's public sector now employs 209,000 people, one-third of the total working population and twice the number employed in manufacturing.

The study noted an "east-west prosperity gap", with a growing gap between greater Belfast and the rest of the region in terms of job numbers, job quality and overall prosperity.

The PwC survey of business confidence suggested that more than half of all planned capital projects for the 12 months to mid- 2003 were cancelled.

Only half of all companies are anticipating growth in the next 12 months.