BELFAST BRIEFING:Financial services to be encouraged to take a punt on Belfast's new Titanic Quarter centre

COULD THERE be a ray of light on the gloomy economic horizon for Northern Ireland?

Edwin Poots, the Environment Minister, certainly believes so.

He has confirmed that in the global economic meltdown which has left no financial institution untouched, particularly south of the Border, planning permission has been granted for a new multimillion pound development that will “house major financial institutions”.

The development is being billed as the second phase of Northern Ireland’s first financial services centre and will be located in the Titanic Quarter in east Belfast, formerly home to shipbuilders Harland and Wolff.

Poots claims the new investment, which is being promoted by Titanic Quarter Limited, an associate company of Dublin-based Harcourt Developments, and Belfast Harbour Commissioners has the potential to secure about 2,000 permanent jobs in the financial sector.

Unless the Environment Minister knows something about the state of the financial markets that others do not he appears incredibly optimistic about the chances of wooing new investors from the financial services sector to this site.

Granted, the North recently secured 500 additional new jobs from the US banking giant Citi but that particular investment project had been in the pipeline for sometime.

Citi, which is also based in the Titanic Quarter, first invested in Northern Ireland more than six years ago, and had been in talks about further specific investment projects since 2008.

It did not decide overnight and certainly not in these post sub-prime days to suddenly locate 500 additional jobs in east Belfast.

Bill Mills, Citigroup’s chief executive for Europe, the Middle East and Africa, is an enthusiastic and long-time fan of Northern Ireland as an investment location.

Persuading Citi to expand might not be quite as difficult as perhaps convincing a fresh investor to commit to a new financial services centre. The job could appear even more daunting in light of the catastrophic developments in the South and the knock-on effect this will have for Northern Ireland’s ambitions for this proposed new centre.

The initial blueprint for the financial services centre suggested it could be a Northern Ireland equivalent to Dublin’s International Financial Services Centre.

During a visit to the Northern Ireland Science Park in Belfast in April 2008 the then minister for finance, Brian Cowen, unveiled an initiative designed to allow firms who established satellite operations in the North to take advantage of Irish corporation tax rates.

The initiative never took off and chances are that boat has now sailed. In fact, given the situation Ireland now finds itself in, it is likely the joint NI/RoI financial services initiative is headed in the same direction as the Titanic, which was constructed in what is now home to the Science Park.

According to recent musings by the North’s secretary of state Owen Paterson, Northern Ireland may no longer even need the help of its closest neighbour to secure a more favourable rate of corporation tax. Paterson recently suggested that the UK government might consider lowering corporation tax levels in the North from 28 per cent to below Ireland’s current 12.5 per cent rate. Paterson said the UK treasury is working with the Executive to produce a paper on rebalancing the local economy.

He said this paper would also “examine potential mechanisms” for awarding Northern Ireland a separate rate of corporation tax.

“Reducing corporation tax to the level of that in the Republic of Ireland, or indeed going even lower, could give a huge marketing boost to efforts to attract investment from across the world,” Mr Paterson has said.

It is a move that would be widely welcomed by many business bodies as illustrated by a new campaign that will be launched today by a coalition.

The coalition unites for the first time the Confederation of British Industry, the Institute of Directors, the Chamber of Commerce, the Centre for Competitiveness, the Northern Ireland Independent Retail Trade Association, the Northern Ireland Food and Drink Association and the industry group Momentum, on the subject of corporation tax.

The coalition plans to issue a joint open letter today to every member of the Assembly, every MP in the North and also the Northern Ireland secretary of state calling for corporation tax to be devolved to the Northern Ireland Assembly.

The business bodies believe a reduction in the rate of local corporation tax is “the fastest way to rebalance and grow the Northern Ireland economy and create jobs.”

In the open letter they state: “While reduced corporation tax will be the ‘game changer’ in terms of attracting investment interest, we recognise that it is not a panacea and should be supported with other incentives.”

Not everyone supports their stance. Sammy Wilson, the North’s Finance Minister, has warned that a reduction in corporation tax rates could cost Northern Ireland in the region of £300 million (€356 million) to £500 million in lost tax revenues.