More than half of business people questioned in a new survey felt the EU criticism of Irish fiscal policy was not justified.

Of the 100 business people interviewed in the first Irish Times/Ulster Bank Business survey, 51 per cent backed the Minister for Finance, Mr McCreevy, in his spat with Brussels, while 42 per cent thought the action of the European Commission was justified. Some 7 per cent did not know.

Support for Mr McCreevy was most pronounced in the distribution/retail sector where some 77 per cent of those polled backed him. By contrast, those working in manufacturing sided with the Commission with 65 per cent saying the reprimand was justified.

The survey, the first in a quarterly series, was carried out by MRBI by telephone on February 15th and 16th. The poll was made up of 26 manufacturing businesses, 30 distribution and retail firms, 39 services firms and five others. Respondents were asked a series of questions relating to issues affecting business, ranging from the euro to inflation to the slowdown in the US economy.

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Staff shortages emerged as the issue about which businesses were most concerned with 88 per cent of those surveyed listing it as a cause of concern and 51 per cent saying it was their top worry.

It was followed by rising costs, cited by 80 per cent, traffic congestion which was mentioned by 56 per cent and the overheating of the economy, noted by 51 per cent. Lack of childcare concerned 11 per cent and the pace of deregulation 10 per cent of businesses.

According to the survey, the slowdown in the US economy has had a limited impact on Irish businesses to date, with just 20 per cent of respondents saying it had affected them while 78 per cent claimed it had not had an impact yet.

Looking forward, just 4 per cent of those surveyed expected the US downturn to have a "very significant" impact on their business but a larger 61 per cent were braced for a "significant" impact. Around a third, or 33 per cent, felt the impact would be "insignificant" and 2 per cent had no opinion.

On inflation, respondents identified employment costs and property prices as being the main factors contributing to inflation followed by fuel prices, transport costs and beer and cigarette prices.

Respondents were also asked a series of questions about the euro including the expected impact of its arrival on their businesses. Just 8 per cent foresaw a "significant" increase in competition while 33 expected a "marginal" increase and 59 per cent expected no difference.

In terms of their preparation for the euro, 63 per cent of businesses expected to have their systems fully ready to operate in euros by the end of June, 30 per cent said they would be ready by end-December while 6 per cent were leaving it to the last minute, saying they would be ready by the end of January 2002.