N.Ireland economy at crossroads awaiting election

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Belfast builders are busy erecting smart waterfront apartments as part of a multi-billion-pound regeneration project, on the site where workers toiled a century ago to make the ill-fated Titanic ship.

But 12 years after Northern Ireland's peace agreement, the private sector here remains weak.

And an expansion of the public sector since the Labour government took power in 1997 is threatened by cuts after the May 6 election.

"It would generally be agreed that between 1997 and 2007 in Northern Ireland -- up until the credit crunch -- there was a large expansion of the public sector," said Graham Brownlow, a lecturer in economics at Belfast's Queen's University.

"The large public sector is partly a result of the private sector being so weak," he told AFP.

The huge transformation of land overlooking Belfast's River Lagan is an indication of the improvement in the private sector since the 1998 Good Friday Agreement, which largely brought peace to the British-ruled province.

But Brownlow said it was unclear how much this improvement was a result of peace between Protestants and Catholics.

"It's very difficult to isolate the peace process impact because other factors were so expansionary," he said.

"The consumption boom that was going on around the rest of the UK occurred in Northern Ireland."

Politicians admit the public sector will have to be cut back after the election, as Britain looks to reduce a mountain of debt caused by the financial crisis.

According to government figures, one in three of Northern Ireland's 766,000 workers is employed by the state -- a proportion larger than in any region across Britain.

David Cameron, leader of Britain's main opposition Conservative party, has said that at 70 percent of output, government has a bigger share of the province's economy than in the communist countries of the ex-Soviet bloc.

Cameron, who leads Labour Prime Minister Gordon Brown in the polls ahead of Thursday's vote, is targeting Northern Ireland for major cuts in government spending.

The province's private sector can boast massive regeneration projects such as the Titanic Quarter, a five-billion-pound (5.76-billion-euro, 7.64-billion-dollar) scheme set to create 25,000 jobs over the next 15 years.

But the underlying trend is less encouraging.

According to financial group PricewaterhouseCoopers, Britain's recent recession cost about 33,000 private sector jobs across Northern Ireland -- more than a quarter of the 122,000 posts created in the decade to 2008.

Local parties are calling for a reduction in business taxes to encourage investment after major downturns for key sectors such as manufacturing and construction.

House prices in Northern Ireland have slumped by about 40 percent since reaching a peak in late 2007 following a massive spike aided by investment from across the border in Ireland.

"Part of the consumption boom that we saw in the UK was on the back of the house price boom," said lecturer Brownlow.

"People felt wealthier and got out the credit cards and spent and spent and spent. In the case of Northern Ireland that has obviously impacted" how house prices had dived, he said.

In Belfast, locals are looking to tourists to help boost the economy.

People from mainland Britain and abroad join open-top buses for tours around the city that take in famous murals painted during three decades of sectarian violence.

And in Victoria Square, a large commercial development opened in 2008, shoppers visit designer stores.

"There's lots of money being spent," said Belfast taxi driver Sam Tosh, 60.

"Belfast is definitely improving. We were 30 years behind" because of the sectarian violence.

"But just looking round the city centre there's a lot of work on. Everywhere you look, all you can see is overhead cranes."

But for 21-year-old Austin Flanagan, a student about to graduate from Queen's University, the economic landscape does not appear so welcoming.

"A lot of recruiters here aren't doing graduate schemes so I think the plan for me is to stay in further education for another year," he said.

© 2010 AFP

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