Senior business leaders in the North fear the resignation of the Ulster Unionist Party ministers from the Executive could trigger a crisis of confidence in the local economy.

Northern Ireland is today without a Minister of the Economy following Sir Reg Empey's resignation at midnight last night in line with the Ulster Unionist Party's decision to vacate three ministries, including the Department of Enterprise, Trade and Investment.

Business bodies are dismayed by the latest setback in the peace process and have warned that it could be a major blow to an already struggling economy.

Since the terrorist attacks in the US, the North has suffered a series of job warnings. Canadian aerospace giant Bombardier has put 2,000 workers at its Belfast factory on protective notice, British Airways is to axe 160 jobs and Nortel has confirmed plans to make a further 115 people redundant.

Mr Nigel Smyth, a director of the Confederation of British Industry in Northern Ireland, said the business community would view the latest political developments as a "major disappointment".

"There would be a lot of concern if the Northern Ireland Assembly was to be suspended again because the biggest problem facing businesses in the North is the current global uncertainty. We do not need political uncertainty to be added to that," Mr Smyth said.

He believes the events of September 11th have put more impetus on all paramilitary organisations in the North to decommission their weapons. "People should be putting Northern Ireland plc first. We have to get our act together in Northern Ireland and we need political stability to compete in the new economic environment," Mr Smyth said.

The Northern Ireland Chamber of Commerce is also concerned that the political impasse will exacerbate the current downturn in the economy. Chief executive Mr John Stringer said there is no likelihood of a recovery before the end of 2001 and that all economic indicators would point to further difficulties into 2002.

"Without a stable and effective government, we are only adding to our problems. Devolved government has worked superbly in Northern Ireland and the alternative means we are going to be operating in a vacuum without local ministers who are more responsive to the issues currently facing Northern Ireland," Mr Stringer said.

Mr Bill Jeffrey, vice-chairman of the Federation of Small Businesses, said there is real concern among business owners about the future.