Belfast's transformed skyline now suggests prosperity and confidence

Hardened cynics who thought peace would never stick cannot ignore the physical regeneration of Belfast

Hardened cynics who thought peace would never stick cannot ignore the physical regeneration of Belfast. Una McCaffrey outlines the economic dividend.

The cycle of demolition and construction has been so determined in some parts of the city that entire streets and landscapes have been transformed.

Instead of abandoned buildings with boarded-up windows, many skylines now suggest prosperity, wealth and, above all, confidence - the elusive X factor that worked against the North's business sector during the 1970s, 1980s and early 1990s. The difference now is that serious doubts do not exist. As one Belfast resident put it, spending millions on a nice glass building becomes a lot more appealing when you're not afraid of a bomber coming along one fine evening to blow the whole thing into the stratosphere.

Mr Colin Lewis, chief executive of Invest NI (the North's equivalent of the IDA) sees this self-belief as the main benefit the North has drawn from 10 years of peace and stability.

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Where unrest had for too long kept Belfast and its surrounding towns off lists of viable investment locations for international and domestic investors, peace has changed perceptions.

Endless statistics illustrate how far things have come for the North's economy over the past decade. The unemployment rate has halved. Some £3 billion has been pumped in as inward investment.

Disposable income among the North's residents has climbed by more than 50 per cent and the number of BMWs has more than tripled since 1990. However, just because the unemployment rate is hovering at a 26-year low of less than 5 per cent does not mean that things couldn't be better. An analysis by economists at PricewaterhouseCoopers (PwC) in Belfast noted that of the 6,000 or so jobs created in the year to the end of June, the majority were in the public sector and in services such as retail and hospitality. Most new employment was, furthermore, part-time and taken up by women, with long-term unemployed people making up 44.7 per cent of the jobless total.

Estimates on the extent to which public-sector money props up development vary but, with government-linked bodies providing one in every three jobs, some claim that two-thirds of the North's economy can be traced back to government money.

It is certainly true to say that public servants are better paid than their private sector equivalents, with the North's department of enterprise, trade and investment finding last spring that the public sector paid an average wage of £462.90 per week, while the typical private sector worker was earning just £370.60.

No wonder Mr David Dobbin, chairman of the Confederation of British Industry (CBI) in the North, refers to the "talent trap" that the public sector can be. Mr Dobbin, who is also chief executive of United Dairy Farmers, sees a move away from reliance on government jobs as key to the North's future economic success. He believes that the various elected parties in the North are coming round to the idea more than ever before. The Assembly should, he believes, be given some powers over taxation that could allow the North to compete more effectively for investment and to stimulate more home-grown commercial activity.

Even though a corporation tax rate like that of the Republic (12.5 per cent) remains out of the question for ingrained political reasons, Mr Dobbin argues that the UK's 30 per cent could be watered down in the North through special incentives, for example, research and development.

Like two-thirds of the North's business people, Mr Dobbin is also a fan, in a personal capacity rather than as a CBI representative, of the euro. The lower interest rates that come with euro-zone membership would only be the tip of the beneficial iceberg, he suggested, adding the traditional UK caveat that euro entry would only work if it came at the right exchange rate.

Another aspect is the gap that has emerged between economic development in Belfast and other parts of the North, particularly western counties.

Compounding this in the North is an infrastructural deficit that means, for example, that no motorway exists between Belfast and Derry.

Official figures value this infrastructural shortage at £6 billion, with a deal under way that would allow the North to borrow an equivalent sum from the UK government in return for raising some money through, for example, water charges, at home. Even if this worked, however, the promised land of foreign direct investment could still be hard to deliver for towns such as Enniskillen, Omagh or Dungannon. The trick here and elsewhere, of course, is to persuade the domestic private sector to take a few risks that could help to fill some of the regional gaps in economic activity. Tourism is one (but not the only) option.

Economic "flair and imagination" is the way forward suggested by Sir Richard Needham, a man who is more aware than most of how far the North has come and how far it needs to go. The former British minister with responsibility for the North's economy at the start of the 1990s, Sir Richard is famed as the only one with sufficient faith in peace to construct a glass railway station in Belfast. He believes the 1994 ceasefire was the turning point for the economy but he warned that economic development needs to occur faster if it is to be sustained. He also acknowledged that even money will find it hard to break through the centuries of "mayhem" that have been the North's history.

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