Belfast Telegraph

Banks 'should lend to local firms'

Northern Ireland's Enterprise Minister has called on banks to help the economy by starting to lend to local businesses.

Arlene Foster was answering questions in the Assembly about reports published by banks on the economy.

"It does frustrate me when I hear banks talking about the lack of confidence in the small to medium size enterprises throughout Northern Ireland," she said. "Well, who is causing that lack of confidence? It is the banks causing that lack of confidence."

The minister said it was time that banks helped the Executive and the economy by starting to lend money.

Northern Ireland has suffered a sharp decline in business activity, sparking fears of further job losses. Research released by Ulster Bank showed a slump in the private sector, with October activity figures recording the sharpest drop in three months. The decline continues a downward trend which has effectively lasted for 35 months and comes despite growth in the overall UK economy.

Chief economist for Ulster Bank in Northern Ireland Richard Ramsey said the data pointed to the prospect of further unemployment.

"Whilst the October survey saw the UK post its strongest rate of growth in three months, Northern Ireland's private sector firms reported their sharpest rate of decline over the same period," he said. "This highlights that the two economies continue to move in opposite directions. To date, there has been only one month during the last 35 months when Northern Ireland firms have not posted a fall in business output."

Pointing to other pressures on the local economy, he added: "Given this context, the trend in job losses, which has now been a feature since March 2008, is set to continue for some time yet."

The Ulster Bank said the headline seasonally adjusted Business Activity Index posted 44.1 in October, down from 45.3 in the previous month. Mr Ramsey said the figures measuring business activity reflected difficulties being faced by a broad section of the economy, with local manufacturing the only area continuing to report growth.

The main findings of the October survey were that new business fell sharply in October, and at the second-fastest rate since April 2009; employee numbers fell in October, in line with the trend observed since March 2008. Anecdotal evidence suggested that job losses reflected falling new business; and anecdotal evidence suggested that some firms were unable to pass on higher costs to customers amid strong competition for new work.