BELFAST BRIEFING:Shops are shutting across the North and public sector cuts will only make things worse

NORTHERN IRELAND is often accused of having a Mickey Mouse economy. With an over-reliance on financial handouts and the highest level of economic inactivity in the UK, it is easy to see why some consider the North to be little more than a fiscal cartoon character.

But as the UK-based independent think-tank, the Centre for Social Justice, recently concluded, there is nothing at all funny about the state of the local economy. Unemployment has more than doubled in the last two years with one in every six young people out of work. There are also an estimated 560,000 people who are “economically inactive” which means they do not have a job and they are not looking for one.

Even a Disney princess with a very large magic wand would be hard pressed to solve the crisis looming once the UK government’s planned budget cuts come into effect.

People who still have a job are understandably worried about the local economy and that worry is stopping them spending, according to latest retail research.

The Northern Ireland Chamber of Commerce says evidence shows there has been a marked change in consumer attitude since the UK election in May. According to Ann McGregor, chief executive of the chamber, life has become much tougher – not just on the high street but for the local shop.

“There is no doubt that retailers across Northern Ireland, and especially in smaller towns and villages, have found trading conditions difficult in recent years. Conditions ahead remain challenging and the expected public sector cuts in October will impact directly on spending in Northern Ireland,” McGregor added.

She believes the problems faced by retailers are symptomatic of the wider problems in the Northern Ireland economy.

“Our over-reliance on public sector spending means that our economy is particularity vulnerable to the cuts expected.”

McGregor is among many sounding a warning to the North’s Executive not to “simply take slices off each department”. The chamber says the way forward is to implement “cuts in areas only where they do not jeopardise the future economic growth.”

But the growing number of closing-down sales and empty retail premises across Northern Ireland highlights that for some the tills have already stopped ringing. The experiences of Derry-based TE Howie Lighting Design illustrated just how difficult the trading environment has been for small retailers in particular.

The owners said they had survived bombs during the Troubles but could not compete against internet-based businesses, red tape and rates in 2010.

Paul Howie hopes to continue the shop’s own internet-based sales arm but he is dead against anyone setting up a physical retail business in a climate which he says is simply “bleak” for independent traders.

His views are shared by John McKernan, the owner of a landmark Belfast music shop which has closed its doors after more than three decades in business. McKernan fears the high street in Belfast is going to become a “wasteland” for independent retailers.

“I really enjoyed the business but I feel that we are only beginning to see the retail downturn that has hit both the UK and the Republic of Ireland. I would be very pessimistic about retail generally,” he said.

Donald McFetridge, a lecturer with the University of Ulster, who pays close attention to the North’s retail sector, said the worst is yet to come. “Between now and Christmas isn’t going to be so bad but January 2011 is going to be the turning point.”

But there are some who believe the outlook might not be so grim. Hugh Black, the manager of Victoria Square shopping centre in the heart of Belfast, is one. “From what I hear Belfast is suffering at the moment and it is not just Belfast. From a Northern Ireland retail perspective life is challenging.

“But Victoria Square has been bucking the trend. Our footfall is up this year by 4 per cent and our sales are up by around 2 per cent,” Black says.

He says the environment is “challenging” for all retailers and Northern Ireland in general can expect a dip once the full picture regarding the proposed public sector cuts becomes apparent in October.

One retailer who has plenty of practice at putting on a happy face regardless of the economic climate is the Walt Disney Company. Last month it opened a revamped, high-tech Disney Store in Belfast as part of a new multimillion-pound retail “transformation” campaign launched in Europe and the USA.

According to Jonathan Storey, the company’s marketing direct, Belfast has been a consistently good performer for Disney since it first opened 15 years ago.

Mickey and his friends may still prove a draw but unless he is planning on sprinkling some of his magic around the rest of Northern Ireland, he could be in the minority.