MEDIUM sized companies in Northern Ireland see the current political unrest as the greatest threat to international competitiveness, according to a UK wide survey carried out by management consultants Coopers & Lybrand.

More than half the 190 local firms questioned reported increased profits last year, and said that they expected to do even better this year. But over 80 per cent of them said their biggest concern was the lack of political progress.

Of these, almost a third were worried that it would raise doubts about the reliability of Northern Ireland companies as suppliers.

A similar number said it could affect demand, and 20 per cent were concerned about the effects on future investment. These misgivings were reflected in the level of business confidence, with less than 40 per cent predicting that the economy would improve.

The survey was conducted among 540 middle market companies - firms with an annual turnover of between £5 million and £200 million sterling. The performance of the 190 Northern Ireland companies in the survey was compared with that of a similar group from England, Scotland, and Wales.

The main findings were:

. the value of orders taken by firms in Britain was greater than for Northern companies;

. Northern exports, while at a lower level than for British firms, are rising at a faster rate;

. Northern firms are more confident of increased orders next year;

. projected capital expenditure among Northern firms is down on last year.

Coopers & Lybrand's principal economist, Mr Philip McDonagh, said the survey had delivered "the best and worst of news".

"The performance of Northern Ireland's middle market firms has been good when compared to similar companies in Great Britain," he said. "But the biggest worry is the potential of the political situation to damage the international perception of Northern Ireland as a reliable source of supply."