Road to recovery more difficult for NI firms
THE road to recovery could be tougher for Northern Ireland firms than those in other parts of the UK, a member of the Monetary Policy Committee (MPC) conceded yesterday.
Speaking to the News Letter during a two-day visit to the Province to talk with members of the business community Kate Barker said recovery here was more complicated than in other regions.
Ms Barker has served for three terms on the MPC which meets each month to set the Bank of England base rate and, like her committee colleagues, regularly makes visits around the country to gauge local opinion.
“Generally I do feel that regional differences are overplayed but here it is a bit different,” she said.
“Everywhere there is quite a mixed picture and most people now think that things have stopped getting worse. Then there are some businesses which are more hopeful and are saying that things are starting to pick up more quickly than they expected.”
In Northern Ireland, however, she said there were factors that were “slightly different and perhaps a bit more downbeat,” than the rest of the UK.
“Firstly, although everywhere in the UK you encounter small businesses saying they’re having difficulty getting loans, it does seem more acute here.
“Secondly, there is more concern here about the public spending cutbacks because of the high share of the public sector in the economy.
“Overall I think it would be right, therefore, to describe the situation here as improving but still really quite uncertain.”
Having worked as chief economist at Ford Europe for nine years, Ms Barker also served for seven years with employers organisation the CBI.
While playing down the current spike in interest rates she said the overall move towards recovery was the important thing to grasp.
“Do I think that it’s possible we will have another quarter of negative production at some point? I do think it’s possible and I think the recovery will be quite hesitant but I wouldn’t necessarily describe that as a double dip.”
Referring to the banking sector she said there was no automatic guarantee of a return to lending.
“The big picture remains that the banks themselves, because they have to make repayments to governments and are concerned about changes in regulations, are somewhat anxious and it’s hard to see the credit really flowing freely while they are in those conditions.
“While I’m not depressed about the economy as a whole, I don’t feel that suddenly these issues that small businesses are having with higher bank charges and higher costs of lending are going to go away very quickly,” she added.
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Tuesday 14 February 2012
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