A £1.5 million sterling (€2,4 million) investment package creating badly needed jobs in north Belfast hangs in the balance today. After months of negotiations and investor visits to the site in the heart of the city, the company in question is likely to abandon the project because of the escalating violence in the area.

The murder of Mr Daniel McColgan, the 20-year-old postal worker shot dead as he turned up for work on Saturday, may well convince the investor that north Belfast is not a place in which to do business.

For Mr Brendan Mullan, chief executive of Investment Belfast, set up to promote investment opportunities in the city, it is a devastating blow. Since it was established in 1998, Investment Belfast has helped bring more than £250 million of investment to the city, which in turn has created around 500 jobs. But each time the peace process falters in Northern Ireland, Mr Mullan believes the North slips very quickly off the global investment radar.

"The majority of potential investors are sympathetic to the fact that Northern Ireland is a region emerging from conflict and that there are issues which must be addressed.

"The bottom line is that the unrest in north Belfast may not have impacted on Belfast's main business district in recent days but it will have severely impacted on the image people hold of us around the world," Mr Mullan said.

He believes that CNN images of rioting on the streets of Belfast and the tragic death of Mr McColgan will undoubtedly cost the city jobs. Last year just as Investment Belfast had secured a new start-up investment in the north of the city there was a period of heightened unrest and violent clashes between the two communities.

"We lost a small but significant investment last summer and now I have a fax on my desk from another potential investor who is getting very concerned about a £1.5 million project that was earmarked for north Belfast.

"We are very close to a deal but against the backdrop of the current situation, we just cannot be sure that this investor is going to come through," Mr Mullan said.

HE believes Belfast's best selling points - its well-priced office accommodation and a pool of well-educated young people - are negated when the world sees images of riots outside a primary school.

"Belfast is competing for investment against the Republic, Scotland, Wales and England. These other regions may not have a product as good as ours but the current images of Northern Ireland make investors think that it is not a stable environment and so they go where they perceive to be less of a risk," Mr Mullan added.

Sir Reg Empey, the Northern Ireland Minister of Enterprise, Trade and Investment, said the appalling murder of Mr McColgan on Saturday had sent "very negative signals across the world".

"This kind of imagery is extremely damaging to our international efforts to promote Northern Ireland as a solid business base.

"I was in the United States just before Christmas on a trade and investment mission and the north Belfast question kept coming up.

"At that stage I was able to say that good progress had been made towards a solution and outline plans to improve social and economic conditions in the area," Sir Reg told The Irish Times. But the Minister said that events of recent days had brought Northern Ireland back to square one.

"The people who are causing the trouble need to waken up to the fact that we are facing genuine economic problems with the downturn in the global economy.

"Inevitably, any further damage to our reputation internationally will cause further difficulties for the local economy and we cannot afford it," Sir Reg added.