Northern Ireland financial summit urged: don’t panic
Northern Ireland's top business brass are convening in Stormont today for an economic crisis meeting following fears a double dip recession is looming.
Finance Minister Sammy Wilson hastily organised the meeting over the weekend after news broke that the Unites States has lost its Triple A credit rating.
This, coupled with last week's stockmarket mayhem and the worsening eurozone debt crisis, prompted Mr Wilson to invite representatives from the CBI, The Institute of Directors, the Federation of Small Businesses and Trade Unions chiefs to his office today.
As the global markets await share reactions to the American debt crisis, Mr Wilson said he will analyse the potential economic affects on the Northern Ireland economy.
Meanwhile, it has been announced that business activity in Northern Ireland's private sector declined for the 20th month running during July. The latest decrease was the sharpest since January and contrasted with growth recorded across the UK economy as a whole, the Purchasing Managers' Index (PMI) said.
The Finance Minister said his meeting today would be "pre-emptive and proactive", but did not elaborate on what decisions, if any, he would make locally.
Mr Wilson said he did not want to be labelled the "prophet of gloom", but conceded the worsening international economic woes could spell "absolute disaster" for the global economy.
"This meeting is about making people aware of the problems, not causing greater uncertainty," he said. "I don't want to be the prophet of gloom, but at the same time I don't want to bury my head in the sand. I hope this affords us the opportunity to look at all of the possibilities."
Mike Smith, head of economics at the University of Ulster, said both the eurozone and the US crisis pose a threat to the local economy. He said: "It is crunch time in Europe.
"Over the coming days, France and Germany must come out with confidence-building strong statements. Up until now they have been wrong-footed, behind the game.
"The American crisis is self-inflicted. The markets are nervous and this is not good news for Northern Ireland. A weak US market is not good for us. I don't believe the US will double-dip but I think growth will drop to 0%."
Independent economist Philip McDonagh said there was "no need to panic".
"There is no need to panic yet about the crisis in the financial markets and in any case there is not a lot we can do about it until the markets find comfort that the crisis is being tackled in a firm and resolute way.
"What businesses need in these circumstances is for Invest NI to continue to underpin their export efforts in whatever way possible and for our banks to be flexible in difficult circumstances."
As Northern Ireland's growth is heavily reliant on exports, Sammy Wilson said it would be hard to buffer the local economy.
The Finance Minister continued: "Our objective is to rebalance the economy here and promote growth and exports through selling goods and if the American economy is ailing then that is not good news for our companies in Northern Ireland."
Mr Wilson described the situation as not a "British problem".
He added: "We are caught up in somebody else's problem.
"Fortunately, the British government has been seen to put in place a credible strategy to deal with its financial deficit. But it will be a bumpy ride. Not a great deal can be done unless the EU are prepared to let the Euro collapse."