BELFAST BRIEFING:Northern Ireland is bracing itself for today's budget, which will affect its own economy, writes FRANCESS McDONNELL

IT IS all eyes South today as Northern Ireland anxiously waits to see how big a cold the local economy is likely to catch from Brian Lenihan’s budget.

The North is already displaying some of the classic symptoms of the economic chill which has spread across the Border, with retailers in particular feeling decidedly shivery about the downturn in euro shoppers.

Some firms are also becoming a little feverish about the prospects for cross-Border trade once the finer details of the budget are revealed today.

Lack of consumer or commercial demand for products could hit very hard given the fact that more than 28 per cent of all of Northern Ireland’s exports go South.

Companies south of the Border have also been major investors in the North.

There are more than 255 Republic of Ireland-based businesses which employ thousands of people in Northern Ireland, and their success both at home and further afield has helped boost the local economy.

According to leading economist Mike Smyth, the North is far from immune to the consequences of what he has described as the “gut- wrenching austerity plan now being put in place in the Republic of Ireland economy”.

Smyth, a senior lecturer in economics at the University of Ulster, believes that just as the North benefited during the years of the Celtic Tiger, “it will be hit hard by the end of the so-called Celtic binge”.

“Jobs will be lost in cross-Border contract work and lower labour mobility in both economies will hit jobs just as it did in the late 1980s,” he adds.

The economist, who is a key member of one of the most influential organisations in the European Union, is clear about just how damaging he believes the “crisis” could be for Northern Ireland.

Smyth, president of the economic and monetary union section of the EU’s European economic and social committee, says the fact that “practically all the developments on the policy front over the past three months have been negative” in the North is a real cause for concern that no one should ignore.

Taken in isolation, this is more than enough reason for warning bells to be ringing for the Northern Ireland Executive as regards the local economy.

In a paper published today in the latest First Trust Bank Economic Outlook and Business Review, Smyth argues that Northern Ireland desperately needs both a change of direction and a rebalancing of its economy towards private investment and private sector growth.

Smyth suggests that all of the conditions for a perfect economic storm are gathering and this, combined with the economic disasters south of the Border, points to a very “gloomy” outlook for 2011.

Although the budget will be watched closely today, there is little sign so far that local political leaders are any closer to agreeing Northern Ireland’s own budget.

First Minister Peter Robinson would like an outline of the next four-year budget to be agreed before the Assembly breaks for Christmas next Wednesday.

He has vowed that “one way or another” there will be a draft budget before the season festivities are truly under way.

He has also conceded that without an agreed budget there is an alternative strategy if a draft budget does not materialise.

“The Department of Finance will put in place arrangements for next year to allow departments, agencies, outside bodies and the private sector to plan for the next 12 months,” Robinson has said.

There is a very real concern among key voluntary and community groups that tactical negotiations by the leading political players will have an impact on their budget allocations in 2011.

Many of these groups operate at the coal face of the economic downturn, helping people who have been made redundant and families who are living on the breadline.

Knowing how much money they have to spend next year is not a luxury for them – it is a vital component of their work and one that politicians would do well to bear in the mind at this time of year.

Honesty may not be a commodity that is easily traded in political circles, but when it comes to the local economy, it may be the only bond that is worth honouring – at least that’s what Smyth and many others like him are currently advocating.

Smyth believes it is time for the executive to be “be completely transparent about the difficult choices that now have to be made”.

“Never before has there been such a proposed cut in public expenditure over such a period of time,” he warns.

As Northern Ireland braces itself today for the last swish of the Celtic Tiger’s tail, it should bear in mind that it will shortly have to face its own day of financial reckoning, budget or no budget.