Warning over funding threat to North economy

The North is facing potential economic crisis with less money from Europe, London and Dublin in the future, an independent expert warned today.

With eastern European states joining the EU and money tight the country is not a special case any more and needs to change now before disaster strikes, Professor Richard Barnett added.

A department of the economy should be established to boost growth in the North and the Executive should focus more on helping local businesses, the University of Ulster academic said.

He led a study, commissioned by the North's Enterprise, Trade and Investment minister Arlene Foster, calling for major changes to government backing for the business sector and gave evidence to her Stormont scrutiny committee today.

“We are actually facing a potential crisis unless we change. Can we change before getting into the crisis where we are going to have tighter public expenditure?” he warned.

He said we have a public sector dependant economy and the EU was going to tighten the purse strings.

He added: “There is a danger if we think if we make a special case we will carry on being treated as something special, those days are over. With the EU and the other countries coming in we are not that special and London and Dublin simply doesn’t have much money to give us in any case.”

The North has enjoyed years of Peace funding from Europe designed to promote reconciliation as part of the peace process. It also enjoys favourable terms through the Barnett formula for how the block grant from Westminster for running the North’s public services is calculated.

The Republic of Ireland has pledged money to improve roads and other links in the North but it has also been battling recession.

Prof Barnett added: “We are facing that crisis. Can we actually anticipate that and move on because other countries are meeting the crises and then changing?”

He said there had to be a step-change and added there was a willingness on the part of government jobs creation agency Invest NI and DETI to consider change.

He called for a radical shake-up of how government is organised and added it was essential one department was responsible.

“It is also important that at the political level there is ownership of it by everybody,” he said.

“You need a committee of the Executive on the economy that actually discusses and formulates policy. It is a demonstrative effect as much as everything else, it shows that this is important here...that this is discussed at the highest level.”

First Minister Peter Robinson and Deputy First Minister Martin McGuinness yesterday attended the third meeting of the Cross Sector Advisory Forum, set up by ministers as an economic taskforce earlier this year to provide advice and ideas to map a path through the current economic crisis.

Last night Mr Robinson told bankers public sector cuts were inevitable.

Professor Barnett led an independent performance review of Invest NI which said it had failed to deliver despite spending £1bn (€1.08bn) in the seven years since its inception.

It has not achieved its goal of raising productivity levels and average pay packets in the region, his review claimed.

The agency has put too much focus on supporting firms that offer low wage jobs rather than investing in companies which would help close the gap in living standards with the rest of the UK.

Invest NI said a range of issues affected economic development, many of which are well beyond the scope or influence of Invest NI.